Technical Weekly – It was the best of times, it was the worst of time (May 26)
Bitcoin Price Consolidates Post Halving as Exchanges Continue to See Withdrawals: Market Watch Weekly
In an eventful week, Bitcoin (BTC) completed its third reward halving on May 11, around 19:23 UTC. The halving was followed by a slight price decline which, contrary to expectations, did not last as the digital asset quickly recovered to touch $9,900 by May 14, rising 15 percent in three days as per OKEx Spot Price data.
Since then, BTC has moved sideways, in a consolidation pattern, ending the week with a 10.36 percent increase. Other large-cap cryptocurrencies that posted notable gains last week include Ethereum (ETH) and EOS, up 8.95 percent and 6.38 percent respectively.
Bulls appear to be in the driving seat for Bitcoin as it decoupled from the struggling stock market last week, and we may see it test the yearly high again in the coming days.
Bitcoin is eyeing another golden cross
As seen on the daily chart, Bitcoin is approaching an inevitable golden cross, with its 50-day moving average (MA) ready to cross above the 200-day MA.
A golden cross is a bullish pattern used in technical analysis.
However, historical returns following similar golden cross patterns have not always been encouraging, with only two of the last four yielding positive results in the short and mid-term.
For example, the last golden cross pattern formed on Feb. 13 this year, after which Bitcoin’s price started to decline from its yearly high of $10,502, losing as much as 64 percent in the next 30 days.
However, when BTC’s MA50 broke above MA200 on April 23, 2019, the price dropped about 12 percent over two days before going on a two-month rally, rising almost 180 percent.
In light of these historic trends, the upcoming golden cross on the Bitcoin chart cannot be considered a reliable signal in isolation.
Massive Bitcoin withdrawals from exchanges
According to data by Glassnode, the last few months have seen a trend of BTC withdrawals from exchanges, and over 300,000 BTC have left exchanges between mid-March and May.
This outflow could reduce selling pressure on the market and can indicate long-term accumulation by whales, purchasing Bitcoins from exchanges and moving them to personal wallets.
Moving forward, Bitcoin is expected to continue consolidation between $9,500 and $10,000 before attempting a move upward to test the yearly high.
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