Noted on-chain analyst Willy Woo has cautioned that Bitcoin could be heading into an extended corrective phase. Posting on the social media platform X, Woo highlighted the urgency for Bitcoin to rise in the coming days. If the cryptocurrency fails to initiate a bullish trend soon, it may set forth a negative divergence on the weekly charts.
Can Bitcoin Avoid a Downtrend?
Woo has observed a mismatch between Bitcoin’s price behavior and technical indicators, which is capturing significant investor attention. The Relative Strength Index (RSI) has formed lower peaks even as Bitcoin’s price hits new highs. This divergence indicates a potential downward momentum for the digital asset.
Willy Woo: “Dear Bitcoin, you must start moving up next week to avoid negative divergence on the weekly charts, or else there will be weeks of stagnation.”
What Does This Mean for Traders?
Data from Woo’s analysis firm, Bitcoin Vector, reveals that although Bitcoin remains robust in its fundamentals, its price has outpaced typical growth rates recently. This acceleration has led to an attempt to reassess market equilibrium. The salient point here is the growing influence of global liquidity over Bitcoin’s traditional market cycles.
Willy Woo: “Bitcoin’s internal dynamics and block reward halvings are weakening. Global liquidity is beginning to dictate Bitcoin’s movements. Relying solely on traditional four-year cycles might be misleading. Bitcoin stands out as an early indicator of global economic developments.”
Experts assert that Bitcoin’s price fluctuations are influenced by more than just cyclical market factors; global trade policies, particularly tariffs, also play a crucial role.
Currently, Bitcoin is valued at $105,737. The anticipated corrective phase, following swift price escalations, introduces a note of caution in cryptocurrency markets. Future trends are expected to be determined not only by technical factors but also by geopolitical shifts, such as the ongoing tension between the U.S. and China.
If Bitcoin remains under pressure, the elongated negative divergence on weekly charts might lead to a continued downtrend. A strong market recovery could mitigate these effects. Bitcoin has started the week on a high note, regaining a market value of $3.31 trillion, albeit with modest trading volumes.
Current circumstances suggest that investment strategies should not solely depend on historical cycles. To navigate the market’s future challenges, both technical and fundamental analytical strategies should be integrated.
Disclaimer: The information contained in this article does not constitute investment advice. Investors should be aware that cryptocurrencies carry high volatility and therefore risk, and should conduct their own research.
Source: https://en.bitcoinhaber.net/bitcoin-braces-for-prolonged-correction-risk