Is Bitcoin Set to Dip Below $100,000? Key Indicators Suggest Potential Decline
Market Analysis
Daily insights by CoinDesk analyst and Chartered Market Technician Omkar Godbole.
Bitcoin (BTC) has maintained a price above $100,000 for the past four months, forming what appears to be a solid base for potential upward movement. However, a key volume indicator presents a contrasting narrative.
The On-Balance Volume (OBV) indicator, renowned in the field of technical analysis, is currently sending warning signals. OBV is a cumulative indicator that adds trading volume on days when the price closes higher and subtracts it on days when the price closes lower. It is often used to confirm price trends and can signal potential breakout directions.
As noted by analysts Charles D. Kirkpatrick II and Julie R. Dahlquist, "When prices are rangebound and the OBV breaks its own support or resistance, it often predicts the direction of a price breakout." Presently, BTC's OBV indicates a possible deeper sell-off.
Despite Bitcoin's current rangebound status above $100,000, the OBV has dropped to levels unseen since April 24, when BTC was around $94,000. This decline suggests underlying weakness, hinting at a potential fall below $100,000. This bearish sentiment aligns with macroeconomic factors, which also suggest a prolonged downturn.
Additional momentum indicators, such as the MACD histogram, are also showing bearish trends, with deeper bars forming below the zero line on the weekly chart, indicating stronger downward momentum.
Key Levels
Currently, Bitcoin is trading below its 50-day simple moving average (SMA), a crucial short-term trend indicator, and is approaching critical support near $107,300. This support level, formed by intraday lows in late August, marked the beginning of the last upward move. A breach below this level could redirect attention to the June 22 low of approximately $99,225. On the upside, the 50-day SMA remains a significant target for bullish investors.