With Bitcoin On-Chain Volume Looking “Very Bearish,” How Can We Be In A Bull Season?
- Bitcoin meets the definition of a descending triangle
- Will we get a similar vintage to 2017?
Yesterday, Bitcoin price went down from around $10,950 to almost $10,220 level with no reason whatsoever.
This drop of more than 6 percent came on the day Bakkt launching warehouse services for the secure storage of its client's Bitcoin.
About this dump, trader Crypto Loomdart said, “whenever people try to prop up / prop down bitcoin, it always overreacts in the other direction.”
At the time of writing, BTC/USD has been trading at $10,400 with 24 hours loss of 4.08% while managing the daily trading volume of $1.27 billion.
Altcoins, as they always do, dropped but this time they didn’t fall harder than BTC. A few coins like Cosmos (8.74%) and Maker (5.76%) are in the green.
In these past 24 hours, the total market cap lost about $10 billion while BTC dominance is still above 70% at 72.93.
Bitcoin forming a descending triangle
Bitcoin price currently meets the definition of a descending triangle, notes veteran trader Peter Brandt.
“Right-angled triangles imply (but do not demand) a resolution thru the horizontal boundary,” he added.
A descending triangle is a bearish chart pattern that signals to traders to take a short position to accelerate a breakdown.
It is created by drawing a trend line that connects a series of lower highs and another one that connects a series of lows.
However, there have been numerous occasions over the years when price breakout on the upside out of a descending triangle, said Brandt. When that happens, it is a descending triangle failure.
Meanwhile, a trader that goes by BigChonis is watching “very important” price action that will unfold over the next few days.
“BTC – watching this pending bull cross or rejection with EMA 12/26 on the daily bitcoin chart… Very important price action over the next few days will determine this… lower time frames already in bull cross but daily is most meaningful to me for expansion.”
Will we get a similar vintage to 2017?
Interestingly, Bitcoin has been trading higher each quarter this year, just like we did in 2017.
That year was the only one since 2014 that Bitcoin registered gains in every quarter, with 11.21% gains in Q1, 131.47% in Q2, 74.89% in Q3 and then 226.28% gains in Q4.
In 2019, in Q1 BTC registered 10.34% gains followed by 161.50% gains in Q2, as per the data provided by Skew Markets.
Now it is to be seen if “we get a similar vintage to 2017?”
These returns clearly show we are in a bull market.
However, with on-chain volume looking “very bearish,” how can we be in a bull season?
Analyst Willy Woo says since 2017, more coins are now being HODLed on exchanges — “gone is the MtGox hangover where everyone GTFO the exchanges ASAP.” Moreover, there has been a rise of custodial swaps for very large buys.
All of this removed the volume off the main chain, as such looking at the volume at face value can be “misleading.”
Other on-chain indicators that rely less on volume, meanwhile are “very confidently in bull mode.”