The massive increase of money supply in the western economies created an unseen demand for hard assets. Bitcoin is maybe the hardest asset in the world, as its supply is strictly limited to 21 million units. That explains, in short, the Bitcoin surge that we are witnessing in the past year. Now, it is time to be very cautious as the Bitcoin bullish trend is showing signs of exhaustion. The macro-environment is still bullish for digital currencies, but in the short term, we may witness a serious correction, especially as concerns altcoins.

Bitcoin Bullish Trend Showing Signs of Exhaustion

After an exceptional year that brought Bitcoin from $7,000 in April 2020 to $66.000 in April 2021, BTC shows some serious signs of trend exhaustion. Meanwhile, BTC adoption and network security are at an all-time high. So, what is changed? Here are some reasons explaining BTC trend exhaustion:

(1) Profit-taking, as since March 2020, Bitcoin has performed over 1,400%

(2) In early 2021, the market cap of Bitcoin exceeded for the first time the iconic 1 trillion US Dollar

(3) There are six profitable (green) months in a row, for the first time in the Bitcoin history

(3) The Bitcoin dominance in the crypto industry showed serious signs of weakness. Investors moved to Ethereum, where the upside potential seemed higher

(5) Plenty of bubbles are formed in the crypto altcoin market, which is not a good sign for the future performance of the whole industry

(6) Recently, India and Turkey legislated against the use of Bitcoin in their countries

(7) The new capital tax proposal in the US, released just a few hours ago

 

 

Bitcoin Technical Analysis

The following logarithmic chart is a Daily BTC/USD chart with the SMA(200) and the RSI Precision indicator on the bottom.

Chart: Daily Logarithmic BTC/USD

 

Short-Term Observations:

-The trend on the chart is still showing Higher/Highs and Higher Lows

-Until there is a daily close below $50K, the trend is bullish

-The volume is diminishing since February, indicating a potential divergence

-RSI Precision indicates a clear divergence

-RSI Precision forms a descending triangle that seems to breakdown

Mid-Term Observations:

-The Bitcoin market seems to have topped in the short-term, but most probably, this market cycle has more room to grow in 2021

-There are institutional investors that will probably seize the opportunity to buy a cheap Bitcoin

-There is really strong support around $40,000, and most probably, this level will hold

Key Support & Resistance Levels

□ Key Support:

(↓) $50,000 (very strong)

(↓) $45,000 (strong)

(↓) $43,000 (weak)

(↓) $40,000 (very strong+)

□ Key Resistance:

(↑) $58,500 (average)

(↑) $61,800 (average)

(↑) $65,000 (all-time high)

(↑) $75,000 (strong)

 

Introducing the PriceMomentum Chart for the first time

The PriceMomentum chart type is our latest innovation. What characterizes this chart is that enhances price activity with price momentum.

-Enhances price action with momentum

-Can perfectly monitor volatile price action, like a logarithmic chart

-Can be used in any asset class

-Offers the opportunity for exceptional chart analysis

-Tells the phase of the market at a glance (above/below the 100 SMA)

Chart: Bitcoin/USD PriceMomentum Chart

Just look how perfectly the BTC PriceMomentum chart respects the SMA(100) during the uptrend. Also see that the PriceMomentum chart has formed a higher/high back in 2019, long before the December 2020 all-time high.

 

■ Bitcoin Trading Signal April 2021

Giorgos Protonotarios, Financial Analyst

for TradingCenter.org (c)

22nd of April 2021