Academy Trading Ideas Article

Bitcoin Price Consolidates Post Halving as Exchanges Continue to See Withdrawals: Market Watch Weekly

2020.05.18

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.

Crypto weekly priced
Weekly returns of major cryptocurrencies 5/11 – 5/17. Source: TradingView

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.

Bitcoin golden cross
OKEx BTC/USDT daily price. Source: OKEx

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.

Bitcoin historic golden cross
BTC pre/post golden cross returns. Source: OKEx

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.

BTC golden cross
BTC daily price chart –  Feb. 2020 to Mar. 2020. Source: TradingView

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.

BTC golden cross success
BTC daily price chart –  Apr. 2019 to May 2019. Source: TradingView

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.

BTC exchanges outflow
Bitcoin: Exchange Balance. Source: Glassnode

Moving forward, Bitcoin is expected to continue consolidation between $9,500 and $10,000 before attempting a move upward to test the yearly high.


Disclaimer: This material should not be taken as the basis for making investment decisions, nor be construed as a recommendation to engage in investment transactions. Trading digital assets involve significant risk and can result in the loss of your invested capital. You should ensure that you fully understand the risk involved and take into consideration your level of experience, investment objectives and seek independent financial advice if necessary.


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