Bears Are Not Done with Bitcoin and Altcoins; At Least in the Short-Term
Bitcoin started crashing in the middle of last week, going to $16,300 on Thanksgiving, hours after hitting a new 2020 high above $19,500, last seen during the green candle to the $20,000 in 2017 bull run.
And over the weekend, the leading cryptocurrency started trending up, already hitting $18,700 on Sunday.
Today, we are trading around $18,750, and it remains to be seen whether we are going back above or down again.
American buyers on Coinbase sucked up 8.2k more BTC in ask liquidity (vs. bid) in the last 3 days, driving us off the bottom: pic.twitter.com/9Q9szWHGLZ
— light (@lightcrypto) November 30, 2020
According to JPMorgan Chase, further decline in BTC price remains possible, which believes momentum traders played a significant role in the drop by unwinding long future positions.
“The previous froth in momentum traders’ positioning has been cleared to a large extent,” wrote the bank strategists led by Nikolaos Panigirtzoglou in a Nov. 27 note. They added that momentum signals would continue to deteriorate unless the digital asset recovers quickly.
“Momentum traders have room to further propagate” the Bitcoin decline, the JPMorgan strategists said.
While profit-taking and concern about new regulations were behind the slump, they also wrote that GBTC needs to receive additional inflows over the coming weeks or the failure to do so would,
“cast doubt to the idea that institutional investors such as family offices have embarked on a trend of embracing Bitcoin as digital gold replacing traditional gold as a long-term investment.”
Stablecoin Whales & Bitcoin Outflow Must Activate
According to Ki Young Ju, the data provider, CryptoQuant, more corrections are expected because All Exchanges Inflow Mean (144-block MA) remains still high. As such, we might see some corrections or simply move sideways this week before breaking the “$20k by December this year.”
If BTC slips in the next few days, by extension, the broad crypto market will take a hit as well.
The factors calling for bearish or sideways action are the number of stablecoin user deposits on cryptocurrency exchanges, which is decreasing.
“The bull market requires massive stable coin deposits in advance to make the BTC price higher,” and “There's no sign of massive depositing stablecoins so far,” said Young Ju.
While the stablecoins reserve for all exchanges might be enough for BTC to break $20k by the end of the year, in the short term (the next couple of days), “the downward trend on stablecoin depositing is a short-term bearish signal,” he added.
The idea is to long BTC when stablecoin whales are active.
When it comes to stablecoin whales, those that deposit more than $50k, they were active on the 2019 bull run as well.
For retail investors, those depositing over $50k in stablecoins, when they are active, the market is likely to be bearish or a fake bull.
Additionally, in the bull market, Bitcoin outflow is usually higher than the inflows. But for now, BTC inflow is higher than outflow ever since the correction last week.
Bitcoin whales, which have been withdrawing since the plunge in March this year, are no longer doing so. Which again spells short-term bearish for Bitcoin, said Young Ju.