Bitcoin’s price rose to around $24,200 on July 28 following a significant 10.5% increase the day before.
The surge came after Federal Reserve Chairman Jerome Powell hinted at a possible slowdown in the current tightening measures by the Fed. This led some Bitcoin analysts to anticipate a short-term upward trend, with the pseudonymous analyst CryptoHamster forecasting a target of $26,000 for BTC.
It seems that the previous downward breakout was misleading, and the bullish trend is now confirmed. Let’s see how quickly $BTC can reach those levels. #bitcoin $BTCUSD $ETH $ETHUSD #ビットコイン #биткойн #比特币 https://t.co/v6x4Ka23L7 pic.twitter.com/nKoEV8440X
— CryptoHamster (@CryptoHamsterIO) July 28, 2022
However, the likelihood of Bitcoin fully recovering from its recent bearish period seems doubtful due to three main factors.
Bitcoin Bulls Have Faced Deceptions Before
Bitcoin hit an all-time high of $69,000 in November 2022. Since then, the cryptocurrency has experienced a decline of over 60%, with intermittent minor price surges along the way.
On the daily chart, Bitcoin has rebounded about five times since November 2021, achieving gains of 23% to 40% with each recovery. Despite these intermittent rallies, the cryptocurrency has consistently resumed its downward trend after reaching a local price peak around its exponential moving averages (EMA) before plunging to new yearly lows.
The current scenario appears similar, with Bitcoin encountering a bullish rejection in June and then rebounding by almost 17% a month later. However, the price of BTC is currently facing resistance at its 50-day EMA, and a breakout above $23,150 could pave the way for a move towards $27,000, aligning with the 100-day EMA.
Even if BTC reaches $27,000, it would still form a lower high compared to previous local peaks, raising the potential for another bearish phase to follow.
High Selling and Low Buying Volumes
Interestingly, the volume trends during Bitcoin’s ongoing correction indicate a greater inclination towards selling the coin at peak levels.
Looking at the daily chart, there has been a notable surge in selling volumes during price declines, such as those in May and June. Conversely, the subsequent recoveries from these declines have been accompanied by relatively lower trading volumes.
This pattern suggests a weakening upward momentum, which could result in another downward price correction.
Bitcoin’s Correlation with Equities Trends Positively
Bitcoin is once again showing a correlation with stock market movements, despite briefly detaching from them in early July.
For example, on July 28, the correlation coefficient between Bitcoin and the Nasdaq Composite index was around 0.66. This correlation persisted even as both markets experienced declines following a consecutive drop in the U.S. gross domestic product (GDP).
This renewed correlation could have negative implications for Bitcoin if the stock market faces further challenges.
The opinions expressed in this article are solely those of the author and do not necessarily represent the views of Cointelegraph.com. All investment decisions involve risk, and it is advisable to conduct thorough research before making any decisions.
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