3 Bitcoin trading behaviors hint that BTC’s rebound to $24K is a ‘fakeout’

After a close to 10.5% increase that started a day earlier, Bitcoin (BTC), price rallied to $24,200 on July 28, after an almost 10% surge.

After Federal Reserve Chairman Jerome Powell indicated that they would slow down their current tightening spree, the gains began to appear. Some Bitcoin analysts predicted that the short-term upside would continue, with CryptoHamster predicting BTC reaching $26,000 in the next few days.

The downside breakout appears to have been a false alarm, and the bullish flag is now valid. Let’s see if $BTC can hit those targets. #bitcoin $BTCUSD $ETH $ETHUSD #bitsutokoin #bitkoin #Bi Te Bi https://t.co/v6x4Ka23L7 pic.twitter.com/nKoEV8440X
— CryptoHamster (@CryptoHamsterIO July 28, 2022

BTC’s chances of recovering completely from its bearish slumber seems low, for at least three reasons.

Before, Bitcoin bulls were duped

Bitcoin reached a record high of $69,000 on November 20, 2022. The cryptocurrency has fallen more than 60% since then and has been subject to several mini-pumps along the way.

The daily chart shows that Bitcoin has recovered at least five times in the past year, with 23% to 40% gains each time. It has maintained its correction after reaching a local price peak around its exponential moving averages, (EMA), and then falling to new yearly lowests.

BTC/USD daily chart with fakeouts Source: TradingView

The situation is the same this time, with Bitcoin experiencing a bearish rejection in June and recovering almost 17% a month later. BTC’s interim resistance at $23,150 (the red wave), is evident. A breakout could take it to $27,000 (coinciding with the 100 day EMA (black).

The price of $27,000 would still be a lower top than the local tops. Technically, this raises the possibility for a bearish continuation move.

Low buying volume, high selling

It is interesting to note that the volume during the ongoing Bitcoin correction indicates a greater interest selling the coin at local tops.

This daily chart illustrates this by showing the volume readings in downtrends and uptrends over the period from November 2021. The last two major price drops in May and June coincided, for example, with an increase in selling volume.

Daily chart of BTC/USD price. Source: TradingView

The rebounds that follow up to price drops that were accompanied by modest or lower trading volumes are, in comparison, much more impressive. Volume behavior continues to be the same with peaking in the downtrend and decreasing as the price recovers.

This could indicate a decrease in upside momentum that may cause another price correction.

BTC to Equities correlation reverses to positive

Despite briefly decoupling in July, Bitcoin continues to trail stock market trends.

On July 28, for example, the daily correlation coefficient between Bitcoin (and the tech-heavy Nasdaq Composite) was near 0.66. This includes both market declines after the U.S. economy plunged for the second consecutive quarter.

BTC/USD daily correlation coefficient. Source: TradingView

This officially confirms the U.S. is in a “technical depression,” which could have a negative impact on the stock market. If Bitcoin continues to show positive correlation with the stock markets, then Bitcoin’s downside potential are high.

com. You should do your research before making any investment or trading decision.

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Eileen Wilson

Eileen Wilson –Technology and Energy My Name is Eileen Wilson with more than 5 years of experience in the Stock market industry, I am energetic about Technology news, started my career as an author then, later climbing my way up towards success into senior positions. I can consider myself as the backbone behind the success and growth of topmagazinewire.com with a dream to expand the reach out of the industry on a global scale. I am also a contributor and an editor of the Technology and Energy category. I experienced a critical analysis of companies and extracted the most noteworthy information for our vibrant investor network.

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