Since trading as low as $6,400 this week, Bitcoin (BTC) has seen a strong price recovery, surging as high as $7,300 late last week as bulls managed to defend key levels. In other words, the leading cryptocurrency jumped by nearly $1,000 from the multi-month bottom, making some believe that bulls are back.
A top analyst, however, has asserted that Bitcoin remains in a clear downtrend, meaning that this latest jump is just a relief rally, not a full-fledged reversal.
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Bitcoin Still Caught in Downtrend
Josh Rager, a popular cryptocurrency trader, recently noted that it is far too soon to be bullish after the $1,000 move earlier this week. Rager looked to the fact that BTC is still stuck below a trend line formed after October’s infamous China pump, adding that unless it breaks this level and the $8,000 resistance, a reversal rally will end abruptly.
Feeling bullish after that $1k move? Zoom out and you’ll see price is still very much in a downtrend
Needs to break/hold above $7950/$8k for any talk of a potential reversal
Break previous low and likely head under $6k where $5,300 area is a promising place for buyers pic.twitter.com/Xhyekb5Yq8
— Josh Rager
(@Josh_Rager) December 21, 2019
Rager’s sentiment that Bitcoin remains in a downtrend has been corroborated by other top traders.
Disk jockey-turned-crypto trader Scott “The Wolf of All Streets” Melker recently reminded his followers to “tread lightly,” asserting that investors shouldn’t get too caught up in the fact that Bitcoin bounced 10% from the local low.
Melker noted that two bearish divergences have formed between the BTC’s price and the Relative Strength Index (RSI), which largely show that the latest price recovery was “more like relief than reversal,” implying that a continuation to the downside has a decent opportunity of playing out.
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Bull Case Building
While Rager believes that Bitcoin remains in a downtrend, there are signs that a bull case is building.
Mike McGlone, the senior commodities strategist for Bloomberg Intelligence, recently made the assertion that Bitcoin has a higher likelihood of surging 40% to $10,000 than falling by 30% to $5,000 in 2020, arguing that BTC is entering a consolidating bull market phase, marked by a tightening in moving averages. McGlone looked to two trends: 1) gold’s strength should aid Bitcoin, and 2) growing cryptocurrency adoption coupled with the Bitcoin halving should drive prices higher by simple supply-demand economics.
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There’s also Dave the Wave, the trader that called the move to the $6,000s months ago. Dave remarked that he expects Bitcoin’s one-week Moving Average Convergence Divergence (MACD) indicator to turn upward, which will kick off the next round of growth in the BTC market.
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