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Bitcoin price has taken a beating over the last several months, resulting in the worst quarterly close since 2011. The bearish momentum has been brutal as crippling contagion spreads across the cryptocurrency market.
However, bearish momentum on weekly timeframes has begun to weaken, providing bulls with their first opportunity to capitalize in some time.
Bitcoin Bearish Weekly Momentum Begins To Weaken, Can Bulls Capitalize?
In the real world, momentum is the measure of velocity and mass. In finance, the term describes the rate of speed at which an asset’s price changes. Considering that Bitcoin price plummeted from above $60,000 to $20,000 in a matter of six months, bearish momentum has been a force to be reckoned with.
Related Reading | Bitcoin Weekly RSI Sets Record For Most Oversold In History, What Comes Next?
However, on weekly timeframes, the first signs of waning bearish momentum have been spotted.
Bearish momentum is weakening according to the LMACD histogram | Source: BTCUSD on TradingView.com
On the MACD histogram, bearish momentum is weakening as can be seen by the histogram changing from red to pink.
The current situation is not an all-clear signal. Momentum will only be considered bullish when the histogram passes the zero line and turns green.
A green signal isn’t always a worthwhile buy | Source: BTCUSD on TradingView.com
As the chart above demonstates, turning green doesn’t always confirm significant upside. So why then might bulls want to consider the current setup? As the saying goes, “when in doubt, zoom out.”
Related Reading | Bitcoin Monthly Tags Lower Bollinger Band, Tool’s Creator Hints At Bottom
Upon zooming out, bearish weekly momentum waning becomes more significant when you consider the level at which the shift in momentum is occurring. The weekly MACD is currently giving a reading of -0.20. Past bear market bottoms came in a fraction of a point below at -0.21.
Momentum is turning where past bottoms have been put in | Source: BTCUSD on TradingView.com
This is still no guarantee that bulls will regain the upper hand. However, could a third bottom at this level end up being the charm crypto holders were hoping for? Bulls will need to capitalize on the potential momentum shift, and follow through – pushing the histogram into the green.
Reclaiming $29,000 would be a strong first step, but given the potential of a recession ahead, investors would likely need more convincing at a return to $50,000 or above.
If bearish momentum returns before the week is over and pushed the histogram into the red, bulls can forget about a rally for a little while longer.
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Featured image from iStockPhoto, Charts from TradingView.com