- BTC/USD retreated from the intraday high.
- The Head of Trading at NEM Ventures warns that BTC may be vulnerable to further losses.
Bitcoin (BTC) is changing hands marginally below $7,000 after a sharp growth to $7,145. The first digital asset failed to hold the ground as the bullish momentum faded away on approach to the important resistance level created by daily SMA50. Despite the retreat, the coin is still 2.2% higher on a day-to-day basis.
Bitcoin is at the crossroads
According to Nicholas Pelecanos, the Head of Trading at NEM Ventures, Bitcoin is at the tipping point now. If the bulls fail to sustain the rally, bears might wrestle out the control over the situation and take back some ground.
Indicators from one of our momentum based strategies are beginning to show a serious bearish setup that could lead to a 50% sell off, sending price into the low $3,000s.This has happened only twice before in Bitcoin’s price history — a crossing of the 150&400 exponential moving averages (EMAs). This was in conjunction with the 200EMA crossing the 300EMA after a price rejection from the 60EMA, which has signalled the start of a major month long sell off. Worryingly, both of these sells offs were sparked by brief sell offs in the Dow and S&P, he explained in a written comment to FXStreet.
He also noted that Bitcoin’s correlation with the S&P and Dow reached 0.82, which is extremely high in the historical context. It means that a large sell off in equities may result in a sell-off in Bitcoin.
The correlation with the S&P and Dow could just as easily help sustain the current bullish momentum, but between the looming technical setup and potential wobbles that could come from earnings season, I’m cautiously preparing for an accelerated decline in BTC and the greater crypto market, Nicholas Pelecanos added.
BTC/USD daily chart
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