Bitcoin fell below the $110,000 mark again today (29th). The market situation has not improved yet, but the market has sent two completely different signals: technical indicators have turned red, warning that the bull market may die out early; on the other hand, investors are still firmly bullish, betting that the market will continue to rise by the end of the year.
Bearish Divergence
According to technical analysis, Bitcoin's 14-month Relative Strength Index (RSI) is showing a bearish divergence - that is, the price of the currency continues to hit new highs, but the RSI index is gradually declining, indicating that the upward momentum is slowing.
Bitcoin monthly chart.
If a "bearish divergence" appears at the monthly level, it often means that the upward trend is losing momentum and a reversal may even be brewing.
The monthly chart shows that although Bitcoin hit a new high between July and August this year, breaking through the high of December last year, the RSI index fell in the opposite direction, forming a "lower high".
What is more noteworthy is that this divergence occurred at a time when Bitcoin touched the long-term pressure line - this pressure line is formed by connecting the two bull market highs in 2017 and 2021.
In other words, technical signals are reminding investors that the Bitcoin bull market may be coming to an end.
The capital market is bullish against the trend: will it challenge new highs by the end of the year?
However, market funds are sending optimistic signals. According to Jake Ostrovskis, an OTC trader at Wintermute, recent large OTC transactions indicate that institutions and high-net-worth investors are still actively positioning themselves for year-end gains.
Jake Ostrovskis noted that Bitcoin call spread options were most active in December, with positions concentrated in the $125,000 to $160,000 range. This suggests that major investors are betting that Bitcoin still has a chance to break through its highs by the end of the year.
Some even expect that if Bitcoin continues its trend towards the end of the year, it could potentially reach as high as $190,000.
As for Ethereum, the market is focusing on the September $4,800 call option, and short-term bullish sentiment is also strong.
The article "Bitcoin bull market stalled early? 'Bearish divergence' flashes red, but investors are betting on a 'continued surge' by the end of the year" was first published on (Blockker).
