Bitcoin investors are still on the edge of their seats, waiting for indications that will determine how the current period of short-term consolidation will end. Within the capitulation, the market took a dive, with the top-ranked cryptocurrency falling from over $36,000 to as low as $25,485 during the week.
A well-known crypto analyst is causing a Twitter frenzy by warning traders that Bitcoin (BTC) has six reasons to fall. In a six-part thread, popular trader CryptoCapo cautions traders that there are reasons to assume BTC will hit new lows soon.
Factors determining BTC’s fall
BTC shattered the 30k support zone, which was the key pivot of the bull run, according to the expert. This is a zone rather than a level. It costs between $29,000 and $31,000, including all wicks. It’s now putting that zone to the test as resistance. The trader refers to a tweet from ten days ago in which he explained why he didn’t believe the $30,000 support level for BTC would hold.
The second reason is a bear flag signal that Capo mentioned in late April 2022. Another reason to expect BTC to continue to fall, according to the trader, is that the bear flag minimum price level has not to be hit.
The bear flag’s minimum aim of $23,000 has yet to be met. This is especially evident with altcoins, where some of the primary targets have yet to be met.
Following that, CryptoCapo examines Bitcoin financing rates, an asset sentiment indicator, to explain why current rates indicate a bottom. For assistance, he adds a Bitcoin open interest (OI) chart.
The trader then examines the Altcoin Perpetual Futures Index (ALTPERP), which follows the price of a basket of popular altcoins such as Ethereum (ETH). The major level was broken by ALTPERP, and the next support is 35-40% lower. This corresponds to most alts’ primary objectives and makes a lot of sense.
A bearish Standard & Poor’s 500 Index (SPX) paired with a bullish US Dollar Index (DXY) are bad omens for Bitcoin, according to Capo. Finally, the crypto trader considers BTC heatmaps, an asset liquidity indicator, as the sixth and final reason why he believes Bitcoin will drop to new lows in the near future.