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05/28/2021 |

TrendSpider on Cheddar News: Bitcoin Takes a Bite

If you were trading crypto back in 2017 you may be experiencing a bit of déjà vu. With high volatility back in play, Bitcoin has managed to reach new all-time highs and then some putting the spotlight back on the cryptocurrency debate. Cheddar News reached out to TrendSpider chief market analyst, Jake Wujastyk, for perspective on the recent price action, and what investors should expect moving forward.

Going into May, the TrendSpider historical seasonality showed only a 33% win rate since the 2017 top, which is the lowest win rate of any month of the year up to this point of the year.

Bar chart showing seasonality data for ^BTCUSD.

Along with the weak historical seasonality, there was negative divergence on the monthly chart showing higher monthly closes with lower highs on the 12-month relative strength index. Furthermore, over the last 2 months, Bitcoin could not close above the 5.618 extensions and even started to break down through the ascending triangle last week, likely creating a self-fulling prophecy in the market, as many other traders likely saw this breakdown.

$BTC monthly chart showing higher highs and RSI lower highs.

$BTC weekly chart showing an ascending triangle breakdown.

During the large move down on Wednesday, TrendSpider’s daily Raindrop showed a lack of volume supporting the move down on a relative basis compared to the volume located at the top of the day’s range which suggested a possible bounce into Thursday.

$BTC daily charts showing low volume within wicks.

The volume for Tuesday was a little less than 4.5x the 50-day average volume shown by the relative volume indicator on TrendSpider. However, since the start of the move down above $50k on May 11th, volume was above the 50-day average, showing strong conviction on this selloff.

$BTC chart showing above average volume on a selloff.