A key indicator suggests there may be a roller coaster ride ahead for the world’s most popular cryptocurrency, which has staged a 112% rally so far this year. The GTI Vera Convergence-Divergence indicator, based on the VERA – Volatility Explosion Relatively Adjusted theory, detecting trends, has flashed a sell signal for the first time in several months, pointing to further downside in the near future as the massive Bitcoin rally slows, according to Bloomberg. The warning sign comes as Bitcoin’s volatility in recent weeks has reached the highest levels since December, when the currency hit a low.
Bear Market Ahead?
Bitcoin’s rally in May marked the largest gain since the highest point of the cryptocurrency bubble in 2017, according to Bloomberg. Now, though, Bitcoin has fallen by more than 5% in the past week, dipping below $8,000 for the first time this month.
The GTI indicator suggests that the cryptocurrency market is far from stable. “The market is in an identity crisis, trying to find a place to stabilize,” said Jake Stolarski, senior trader at Greenwich, Connecticut-based Cipher Technologies told Bloomberg. “The key technical levels have been creating market volatility, for sure, due to sudden shifts in sentiment.”
Bitcoin’s price has not been able to stabilize despite momentum gained by greater mainstream acceptance of digital currencies by big banks, asset management firms and technology companies. “People are seeing where the resistance is, where the stops are both up and down,” Stolarski said. “People are trying to find a stabilizing point where they can layer into a core position.”
What It Means
If the GTI indicator is correct and Bitcoin continues to fall, it will mean that traders who have bet that the cryptocurrency could spike back up to $20,000 will have miscalculated. Bitcoin’s tumble may coincide with another bit of disappointment for cryptocurrency enthusiasts. On June 19, the last Bitcoin futures contract on Cboe Global Markets Inc. will settle, per another report by Bloomberg. Cboe’s Bitcoin futures were hailed as a revolutionary financial product when they launched a year and a half ago. Now, Cboe says it “is assessing its approach with respect to how it plans to continue to offer digital asset derivatives for trading, but we have nothing new to announce at this time,” the exchange said.
