This is an analytical post by Omkar Godbole, CoinDesk Analyst and Chartered Market Technician.
Bitcoin BTC$121,883.40 It fell below $120,000 late Thursday before rebounding to about $121,500. Achieving further gains may prove difficult or short-lived for two reasons.
First, momentum indicators on short-term charts have turned bearish. On the hourly chart, the simple moving averages (SMAs) of the 50, 100, and 200 candlesticks are bearishly aligned and stacked one above the other. This is a typical bearish configuration. Additionally, the pattern of consecutive highs and declines indicates that buying pressure is waning.
BTC hourly candlestick chart. (Trading View)
Second, major ETFs are exhibiting risk-off sentiment.
The iShares iBoxx High Yield Corporate Bond ETF (HYG) has broken below the bullish trend line from its May lows and is below its 50-day SMA for the first time in six months.
Because HYG owns high-yield (“junk”) corporate bonds, the downtrend here typically reflects increased risk aversion among investors, who are moving away from riskier, lower-rated bonds.
Although BTC is often referred to as digital gold, it has historically been correlated with stocks and reflects broader market risk sentiment.
Meanwhile, in the financial sector, the Financial Select Sector SPDR Fund (XLF), which tracks major bank stocks, has lost momentum since late August and appears to be forming an uptrend pattern that suggests a bear market. Similarly, the Regional Banks ETF (KRE) also fell below the bullish trend line established since April.
Daily chart of XLF and KRE. (Trading View)
major level
BTC’s bearish technical settings on short-term charts, coupled with caution on major bonds and bank ETFs, indicate a risk-averse market environment.
BTC’s immediate support is seen at $120,000 and then $118,000. A break above $124,000 will weaken the chances of further decline.
