July 14, 2024
Weekly Close of Bitcoin Price Sparks Dead Cat Bounce Fears
Bitcoin price today

Weekly Close of Bitcoin Price Sparks “Dead Cat Bounce” Fears

Monday, July 8, 2024: Bitcoin Price Today is $57,170. As we go into the second week of July, traders are worried that the bitcoin price may continue to fall. Bitcoin is alarming bulls as unrealized losses rise and forecasts indicate more suffering ahead, following its lowest weekly close in four months. Even if the trading world is surprised by the recent losses, even lower levels are expected. The present downturn is historically small, opening the door for a potential decline below $50,000 or less.

BTC/USD 1-hour chart. Source: TradingView

Investor Sentiment and Market Dynamics

With speculators and some long-term holders currently underwater, investor mood is shaken. The German and American governments’ sales of Bitcoin and their repayment to Mt. Gox’s creditors appear to be the main causes of the downward trend. This has caused a major shift in market sentiment, with the Crypto Fear and Greed Index leaning toward “extreme fear” following a 60% decline in the previous month. TradingView reports that although the $5,000 bounce over the weekend sparked hopes, BTC/USD’s subsequent decline to $54,300 and trading roughly $2,000 higher has increased volatility.

Popular analyst Mark Cullen offered a pessimistic assessment of X by characterizing the surge on Friday as “more of a dead cat bounce and continuation lower over the next few weeks.” Santiment, a research organization, pointed out that both Bitcoin and other cryptocurrencies were performing poorly, with Bitcoin losing 2.3% over the last day, 8.6% over the previous week, and 18.4% over the previous month.

“Most altcoins have shown far larger dips.”

Crypto market cap (excluding top 10 tokens) 1-day chart. Source: TradingView

Tony “The Bull” Severino warned, “Bitcoin closed below the lower Bollinger Band on the weekly,” signaling a need for caution.

“This is a sell signal. More downside is probable.”

BTC/USD chart with Bollinger Bands data. Source: Tony “The Bull” Severino

Market Outlook of Bitcoin Price

Regarding where BTC/USD might falter during this drop, traders have differing views. Revealed that, based on past drawdowns, $45,000 is starting to emerge as a favorite goal. Co-founder of Material Indicators Keith Alan emphasized the significance of the Weekly RSI:

“There’s a lot of chatter on CT about the bottom being in, but I’m not seeing any validated confirmation of that yet. A retest of support could give us the confirmation we are looking for, but I’m not confident $53.5k will hold.”

Alan and Hyland pointed to the relative strength index (RSI) as an indicator that Bitcoin is “oversold” at current levels.

“I’m watching the Weekly RSI very closely,” Alan confirmed, alongside a chart from Material Indicators’ proprietary trading tools showing potential bounce zones.

“If 42 on the Weekly RSI doesn’t hold, pack your bags for a trip to Bearadise.”

BTC/USD chart. Source: Keith Alan

Which is currently at 45.6 and might go lower. “The weekly RSI has nearly pulled back to the August/September lows of last year when BTC was trading at 25k,” according to Matthew Hyland, suggesting a potential further collapse.

“Another red weekly candle would likely push the RSI lower which would then give opportunity for Bullish Divergence.”

The notion that Bitcoin might form another “double top” with a target price of $44,000 if the decline persists was explored by seasoned trader Peter Brandt. Significant trader liquidations over the previous week have left many investors holding Bitcoin at a loss. Axel Adler Jr. of CryptoQuant issued a warning, citing short-term holder whales holding 218K BTC in unrealized losses as a “ticking time bomb”. A more upbeat assessment was provided by fellow CryptoQuant contributor Mignolet, who pointed out similarities between September of last year and the spent output profit ratio (SOPR), which may point to a nearing bottom.

Bitcoin STH-SOPR (screenshot). Source: CryptoQuant

More macroeconomic data, such as the US Producer Price Index (PPI) and Consumer Price Index (CPI) prints for June, will be released in the upcoming week. These reports may put risk assets through additional testing. The uncertainty is increased by Jerome Powell’s testimony before the US Senate and the Federal Reserve’s impending interest rate meeting. There is only a 6.7% possibility of rate adjustments in July, according to the CME Group’s FedWatch Tool. “We have to see how this week pans out with CPI data, etc., but until otherwise I’m still betting lower to come,” conservative commentator Cullen says.

Fed target rate probabilities for July meeting. Source: CME Group

The Crypto Dread and Greed Index has fallen to 28/100, its lowest since early 2023, despite a 25% decline in BTC/USD from its peak in March. It has moved from “extreme greed” to “extreme fear.” The irony was highlighted by well-known trader Moustache, who noted that although sentiment is very different, Bitcoin’s present levels match its initial high from 2021. “Fear is indicated by the Crypto Fear & Greed Index as $BTC retests its 2021 ATH. Like in 2020, exactly like in 2017,” he said, using historical comparisons.

“I think there is hardly a more bullish sign than this.”

Crypto Fear and Greed Index (screenshot). Source: Alternative.me

Image by MichaelWuensch from Pixabay

Disclosure Statement: Miami Crypto does not take any external funding, or support to bring crypto news to the readers. We do not have any conflicts of interest while writing news stories on Miami Crypto.

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