Bitcoin Price: 2 Key Metrics Hint at Big Dip Before Next Bull Market

On Dec. 18 Bitcoin (BTC) price thrilled investors by providing a $1,000 move from $6,430 to $7,450 after bouncing off the descending channel trendline near $6,400. 

Multiple analysts from Cointelegraph contributor filbfilb to veteran commodities trader Peter Brandt all pointed to a popular logarithmic model that stressed the importance of the $6,400 level. 

BTC USD 3-day chart

BTC USD 3-day chart. Source: TradingView

This week’s bounce off $6,400 is provided some short-term relief from investors believing that a BTC price catastrophe was avoided. Nevertheless, Bitcoin is not fully out of the woods yet. 

Bitcoin flips back to bearish

Since Thursday’s 10% gain, the price has settled back below the $7,300 resistance and below the 20-day simple moving average of the Bollinger Bands indicator. 

BTC USD 6-hour chart

BTC USD 6-hour chart. Source: TradingView

A drop to the lower Bollinger Band would place the price below the $6,800 support and increase the chance of revisit to the descending channel support. 

As mentioned previously, failure at the descending channel support ($6,345) also opens the door again for a drop to $5,350. Since topping out at $7,452, the price has painted a lower daily high and the 6-hour chart shows that momentum is fading as the price range tightens and moves closer to the 20-SMA. 

Currently, the price is being held up by support at $7,100 and if this gives way, a drop to $6,800 to $6,600 is likely. 

MACD Histogram and RSI show fading momentum 

The same can be observed on the moving average convergence divergence (MACD) where the histogram shows momentum slowing. 

The MACD has ceased its ascent by flattening and pulling closer to the signal line. The relative strength index (RSI) on the 6-hour timeframe has also flattened, mirroring Bitcoin’s sideways price action. 

Stay above $6.3K to avoid the fray

BTC USD weekly chart

BTC USD weekly chart. Source: TradingView

So, from the weekly timeframe, down to the 4-hour timeframe, Bitcoin price action is bearish and needs to hold $6,685 to $6,274 to avoid a drop to $5,300 where the daily chart shows investors interest. 

Anyone familiar with Bitcoin and crypto knows that the price action is driven by more than just chart technicals. So let’s have a look at some of the other factors that may be influencing Bitcoin’s price. 

Things to watch with Bitcoin price

This week Cointelegraph reported that long positions at Bitfinex continue to steamroll higher and this week BTC/USD Longs have soared to a new all-time high. 

BTC USD Longs weekly chart

BTC USD Longs weekly chart. Source: TradingView

Some analysts cautioned that Bitcoin is overdue for a strong squeeze on long positions and others attempted to decipher why long positions continue to rise in the face of increasingly bearish price action.

A general theory is that investors believe Bitcoin price will not fall far enough to liquidate leveraged longs and with the 2020 halving event approaching investors believe they have more to gain from being long rather than short. 

Cointelegraph contributor Michael van de Poppe recently tweeted that the expectation that a long squeeze is overdue is false. He explained: 

“There seems to be a narrative that longs need to be squeezed before we can move upwards. That’s a wrong statement, based on history.”

BTC USD Longs 4-day chart

BTC USD Longs 4-day chart. Source: TradingView

According to de Poppe: 

“The ATH’s of longs on Finex was constantly around a low of Bitcoin. They started to drop with a breakout upwards.” 

Bitcoin Unrealized Profit vs Unrealized Loss chart

Bitcoin Unrealized Profit vs Unrealized Loss chart. Source: glassnode.com

Another popular analyst, The Crypto Dog, also posted a chart from blockchain analytics provider Glassnode, highlighting Bitcoin’s Unrealized Profit vs. Unrealized Losses.  The analyst explained that: 

“Bitcoin Unrealized Profit is low at the moment & seems to be trending down. At the same time, Unrealized Loss is trending up. Look out for a cross over, historically signaled bottoms.”