Bitcoin (BTC)’s recent price sell-off may be far from over, according to technical analysis from alternative asset manager Valkyrie Investments.
The top cryptocurrency by market cap sees lingering uncertainty about the U.S. debt ceiling this month as hawkish Fed rate hikes reignite and the dollar index rebounds. As a result, it fell 10% to $26,200.
According to Valkyrie, we may see further declines towards $24,000 as Bitcoin’s daily Ichimoku Kinko Hyo (momentum indicator) turned bearish.
Japanese journalist and stock commentator Goichi Hosoda devised the Ichimoku Kinko Hyo in the late 1960s. This indicator consists of five lines: leading span A, leading span B, conversion line, base line, and lagging span.
The area bounded by Leading Span A and Leading Span B is called a cloud and is used to identify longer trends. Bullish clouds are green, bearish clouds are red. The crossover between the conversion line (the midpoint of the 9-day range) and the reference line (the midpoint of the 26-day range) is used to identify short-term buy and sell signals.
The chart below has green clouds, which indicate a good long-term outlook. However, Bitcoin’s price recently returned to the clouds, confirming a bearish crossover as the conversion line (blue line) fell below the reference line (red line).
Analysts at Valkyrie, led by Chief Investment Officer Steven McClurg, wrote in a May 23 note to clients, “This could be a short-term contraction as bullish momentum wanes. “It points to a continuation of the bullish trend.”
Bitcoin’s pullback in early March halted at the lower end of the cloud before the subsequent rally pushed the price to $31,000 in mid-April.
“A close inside the cloud would indicate a loss of cloud support and could move to the lower end of the cloud, in which case the price would be around $24,000. added the analyst.
｜Translation: coindesk JAPAN
｜Editing: Toshihiko Inoue
| Image: Valkyrie Investments
｜Original: Bitcoin’s ‘Ichimokou Cloud’ Suggests Deeper Drop Toward $24K: Technical Analysis