Bitcoin’s long-held bout of sideways trading may soon be coming to an end, as the cryptocurrency is currently flashing signs of overt weakness as it hovers around the lower boundary of its long-held trading range.
Analysts do believe that this sideways trading will result in a downwards movement.
One technical indicator recently flashed for the first time in several months, signaling downside could be imminent.
The last time this indicator flashed, the cryptocurrency plunged down to lows of $3,800 from highs of over $8,000 in the span of 48 hours.
One historic pattern also seems to indicate that Bitcoin may need to post some intense losses before it is able to enter a new trend. This could mean that a decline down towards the $5,000 region is imminent before it is able to kick off a fresh parabolic cycle.
Bitcoin Flashes Signs of Weakness as Indicators Point to Further Downside
At the time of writing, Bitcoin is trading down just over 1% at its current price of $9,100. It has been hovering around this level for the past couple of days, with buyers being unable to spark any intense upwards momentum.
How it trends next will likely depend on its reaction to $9,000. This level has held as a key support on multiple occasions over the past few weeks, but a decisive break below it could be all that is needed to spark a fresh bear trend.
If bulls want to negate this overt bearishness, they will need to propel the cryptocurrency up towards the upper boundary of its trading range around $10,000 and gain a firm foothold within the five-figure price region.
Earlier today, Bitcoin’s cloud indicator flipped red for the first time in several months. The last time this indicator flipped from green to red, the cryptocurrency declined by over 50% in a matter of mere hours.
This could signal that the benchmark digital asset’s mid-term uptrend will soon come to a firm end.
The below chart recently offered by a popular analyst shows this trend:
Image Courtesy of Teddy. Chart via TradingView
This Historic Pattern Signals Further Blood May Be Required Before BTC Rallies Higher
This phase seems to entail the cryptocurrency seeing sharp declines on multiple occasions over a short period before it exits the bear market and begins a new parabolic cycle.
“BTC – A scenario I believed that has a good probability of playing out since the start of June – Still very much on the cards,” he said.
Image Courtesy of TraderXO. Chart via TradingView
If this previous pattern repeats itself, it does appear that the crypto could be positioned to decline towards $5,000 in the near-term.
Featured image from Shutterstock. Charts from TradingView.