The price of Bitcoin (BTC) surged from $9,160 to $9,584 within the last 48 hours. But despite the 4.6% gain, some traders are turning short-term bearish on the top cryptocurrency.
According to several technical analysts, the market structure of Bitcoin remains slightly bearish. At higher time frames, $9,500 could still technically be a lower high. The term “lower high” is used when the recent peak of BTC is lower than previous highs.
The daily chart of Bitcoin. Source: TradingView.com
On June 3, June 10, June 22, and July 22, BTC hit $10,473, $10,180, $9,794 and $9,584, respectively. Each peak is lower than previous highs, making it a lower high formation.
Reasons for a short-term Bitcoin bearish bias
Some traders are bearish on Bitcoin for two major reasons, namely a lower high structure and declining volume.
Crypto trader Zoran Kole, for example, said that a bearish market structure at a higher time frame remains intact. On the daily chart, four consecutive lower highs indicate a potentially weak consolidation phase. He wrote:
“HTF Bearish MS remains intact. One shouldn’t use a potential LH as invalidation for a swing position unless that LH is confirmed with a LL. Patiently waiting for the 95xx sweep to compound. Looking to sell 9530-9580. Clear invalidation above 97/98 (break in MS).”
A potential lower high at a higher time frame for Bitcoin. Source: Zoran Kole
Meanwhile, a pseudonymous trader known as Crypto ISO suggested that the market could see a pullback if BTC hit a lower high. For it to confirm, BTC would have to break down from $9,500. The trader said:
“Would be tough for a lot of people if this is the lower high. Those that understand MS will get this.”
Pseudonymous trader DonAlt said that for a short-term bearish trend to confirm, BTC ideally needs to drop below $9,300. If BTC stays above $9,500, the popular trader said short-term market bias could weaken.
“Close above that red line today ($9300) and I might reconsider my short term bearish bias (mid-term bear bias remains). Close below and I’ll consider shorting more aggressively targeting the green line ($8500) first and green area second (~$7000).”
Bullish variables for BTC
Apart from technicals and market structures, there are more fundamental factors supporting a bullish case for Bitcoin.
For instance, the hash rate of BTC remains resilient, leaving the mining ecosystem healthy. Lower selling pressure from miners, combined with declining exchange inflows, suggests BTC could see an uptrend.
Data from Binance Futures show that the majority of “top” traders on the platform remain majority long on Bitcoin. But over 50% of traders are short on large-market cap alternative cryptocurrencies like Ether (ETH) and XRP.
Raoul Pal, the CEO of Global Macro Investor, said on July 23 that Bitcoin could outperform gold, which has been on a strong rally in recent weeks. He stated:
“The other bet is that bitcoin will likely beat gold too. The bitcoin/gold cross looks powerful but has yet to break out.”
Whether the short-term bearish market structure could cause a near-term pullback, or bullish fundamental factors would offset the risk, remains to be seen.