Bitcoin has been struggling for the last two weeks, although the asset has tried to break out of its bearish trend the asset has been pulled right back. One analyst says that Bitcoin is now in a ‘textbook rising wedge.’ This means despite the drop to recent lows, there could be further downside in the weeks to come.
Volatility Makes Indicators Go Crazy
Volatility has risen to a three month high. This was confirmed mid-week when Bitcoin dropped from highs $10,100 to reach current lows of $9,600. Current volatility levels date back to November. On Wednesday, in less than an hour, Bitcoin crashed from $10,168 to test the $9,400 support.
This volatility is not expected to go any time soon. The on-chain activity has shown that whales have been moving loads and with every transaction, retail investors will be reacting. This could see them pump or dump.
Kraken’s research has confirmed the emergence of whales noting that wallets with 1K BTC to 10k BTC recorded heightened activity in the second half of January.
Analyst Monetae says that volatility makes indicators go crazy. They rapidly change depending on sentiments on the market. This makes it much harder to predict what prices will do next.
Bitcoin At Risk Of Further Downside
According to the latest trend, Monetae says that Bitcoin has printed a Rising Wedge pattern. He notes:
This pattern was formed by higher highs combined with small pullbacks during this seven-weeks trend.
Bitcoin was in January and early Feb recording small pullbacks which showed its strength going upwards. But heading to the $10,500 position, the analyst notes that trading volume was dropping. This showed that investors were not supporting higher price positions. As a result, the $10,500 position was rejected.
By dropping from $10,500 to $9,200 within 6 days, the support Line of the Rising Wedge broke, the analyst says.
In addition to this, since Bitcoin plunged, it is now moving below the EMA 20. This is another bearish sign that means Bitcoin could test lower lows.
As mentioned, indicators are going crazy. They are changing fast as a result of volatility. There are however more than enough reasons to be bullish about Bitcoin despite short term downfalls.