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Bitcoin Prices Slip to 2-Month Lows as CoinDesk’s Bitcoin Trend Indicator Turns Neutral From Bullish
Prices fell to $26,160 soon before press time, reaching the lowest since March 17.
Updated Jan 24, 2024, 12:34 a.m. Published May 12, 2023, 7:06 a.m.
Bitcoin continues to lose ground in the wake of CoinDesk's Bitcoin Trend Indicator shedding the bullish bias for the first time in three weeks.
The top cryptocurrency by market value fell to $26,160 before press time, reaching the lowest since March 17, according to CoinDesk data. Prices have declined by over 12% since May 6, decoupling from the uptick in traditional risk assets like Nasdaq.
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The BTI indicator, which measures the directional momentum and strength in bitcoin's price, flipped from bullish to neutral on Thursday. The indicator consistently signaled an uptrend since Jan. 13, barring the brief red flash (downtrend signal) in mid-March and the neutral reading on April 24.
According to Matthew Dibb, chief investment officer at Astronaut Capital, low liquidity seems to have helped few sellers drive prices lower.
"There seems to be 'paper thin' liquidity right now, even across majors such as BTC. While we can't point at a direct reason for the weakness, any medium to large offers are driving the market down," Dibb said.
Liquidity or market depth has recently worsened on major exchanges, including Binance, making it difficult for traders to execute large orders without influencing prices.
According to Dick Lo, the founder and CEO of quant-driven crypto trading firm TDX Strategies, the downside move may gather pace if traditional risk assets turn lower.
"We could get an acceleration on the downside IF U.S. equities also start to roll over," Lo told CoinDesk. "$25,200 is key support for BTC followed by $23,100 on potential downside acceleration."
Lo added that the bearish bias would be invalidated if prices rise above $28,500.
As analysts warned last week, bitcoin's drop to two-month lows has confirmed a head-and-shoulders bearish reversal pattern on technical charts. The breakdown has opened doors for a deeper slide toward support around $25,000.
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Coinbase Sees Crypto Recovery Ahead as Liquidity Improves and Fed Rate Cut Odds Climb
The crypto exchange also took note of a so-called AI bubble that continues to go strong and a weaker U.S. dollar.
What to know:
- Coinbase Institutional is seeing a potential December recovery in crypto, citing improving liquidity and a shift in macroeconomic conditions that could favor risk assets like bitcoin.
- The firm's optimism is driven by rising odds of Federal Reserve rate cuts, with markets pricing in a 93% chance easing next week, and improving liquidity conditions.
- Several recent institutional developments, including Vanguard's crypto ETF policy reversal and Bank of America's greenlighting of crypto allocations, have contributed to bitcoin's rebound from recent lows.
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