Despite the Bitcoin price holding firm above $100,000 and remaining near its all-time highs, fears of a significant market crash loom large. Pseudonymous crypto analyst FriendlyRox has pointed to several bearish indicators — from declining volume to waning momentum — that may suggest an impending price drop. The question now becomes: what would be the implications of losing the $100,000 psychological threshold?
Bitcoin Price At Risk With Dwindling Volume And Momentum
In this analysis, FriendlyRox has shed light on the decreasing metrics of trading volume and momentum as primary catalysts for the forecasted price downturn. Interestingly, this comes amid bullish news, including reports of institutions increasing their Bitcoin holdings and decreasing supply on exchanges, suggesting that investors are opting to hold for potentially higher future prices.
The evident decline in trading volume has been particularly marked since Bitcoin’s price experienced a fallback below $100,000 earlier this summer, followed by a minor recovery. Data from Coinglass indicates that Bitcoin trading volumes have remained consistently below the $100 billion mark throughout July. Simultaneously, the momentum indicator has shown a worrying negative divergence, signaling a potential downturn.
Moreover, the current Bitcoin price action has mirrored historical trends that typically precede market tops. Notably, instances where Bitcoin has approached the 50 EMA (Exponential Moving Average) have often led to price retractions — a pattern FriendlyRox notes could now signify another crash, especially since the price has extended even beyond previous highs.
Other technical metrics such as the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) are now reflecting diminishing momentum, further compounding the bearish sentiment for the leading cryptocurrency by market capitalisation.
BTC Bottom Targets
Given the alignment of these bearish trends, the analyst has predicted a potential decline of approximately 50%. As both trading volume continues to diminish and momentum moves into negative territory, the expectation is that Bitcoin’s price may retrace back to the 50 EMA.
Intriguingly, this 50 EMA level is positioned below the previous Bitcoin price peak, placing it around the $60,000 mark. A crash of such magnitude would be reminiscent of the COVID-induced market crash back in 2020, as well as the fallout from the FTX exchange debacle in 2022. Nonetheless, such a scenario would likely lead to considerable losses across altcoins as well.
While predicting an exact timeline for these developments remains challenging, the analyst has suggested it could take several years for this situation to fully materialize, remarking, “Let us see how it unfolds.”
