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Bitcoin: Why a bear trap will boost the king coin

2min Read

With the exchange netflow going negative, BTC could be looking at technical indicators support to go parabolic. Will it?

Bitcoin: Why a bear trap will boost the king coin

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  • BTC could be leaving its formerly formed bear trap.
  • A bullish divergence could lay grounds for a short-term rally.

In the last seven days, the value of Bitcoin [BTC] decreased by 7.14% while consolidating around the $26,700 region. However, the days of respite could be near, based on a tweet put out by Gert van Lagen.

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Steering away from the knees and toes

According to the technical analysis specialist, BTC had formed a “perfect” head and shoulder bottom below the 200-day Simple Moving Average (MA). This caused a bear trap bottom in preparation for a bullish crossover.

Used by traders to identify price reversals, a bearish head and shoulder has three peaks, with the middle one rising higher than the others. In an instance like this, BTC could reverse an upward trend.

But according to Lagen’s chart, the pattern depicted a bearish-to-bullish trend. This was because the middle peak dropped incredibly lower than the sides. This signaled a possible end to the downward trend. 

Before his latest observation, the analyst had pointed out a historical impulse, correction, and blowoff trend. There, he noted that it was BTC’s current situation. 

On 20 May, he told his 71,900 followers that Bitcoin could be in line for a large degree of bullish movement, as described by the Elliotwave impulse.

Attempts are already on the way

Interestingly, Lagen was not the only part who shared a bullish sentiment. In a 26 May publication on CryptoQuant, Eralp Büyükaslan, BTC was forming a bullish divergence similar to the bearish top exit of November 2022.

Bitcoin bullish divergence

Source: CryptoQuant

The crypto investor and analyst also pointed out the negative exchange netflow as another reason for a short-term bullish move. When there is a negative value of the indicator, it means that outflows are overwhelming inflows. 

Thus, a possible outcome, when prolonged, could be a sign of accumulation. This, in turn, could become bullish for the price of the asset.

Bitcoin exchange netflow

Source: CryptoQuant

From a technical point of view, Bitcoin’s volatility seems to be contracting. Recently, particularly on 25 May, the price left the zone where it touched the lower part of the Bollinger Bands (BB). 

How much are 1,10,100 BTCs worth today?

This move means that BTC had exited the oversold zone, even as the price was not near the upper band. At press time, the Relative Strength Index (RSI) was 43.02 — an increase from 38.36 on 24 May.

Though the slight uptick represents a move from the bearish momentum, BTC buyers might need to neutralize the dominance of sellers to solidify the potential bullish trend. 

Bitcoin [BTC] price action

Source: TradingView


Victor Olanrewaju is a full-time journalist at AMBCrypto. Settled in Lagos, his fascination with blockchain technology and the cryptocurrency market arose out of his love of freedom and everything free. As a Nigerian, Victor understands the impact unfounded financial restrictions have on a population. He sees Bitcoin and cryptos as a way to circumvent these obstacles, as a tool for value creation despite all the setbacks. A graduate in Physics, Victor previously worked as a Senior Marketer at Melange Technologies. Before that, he dealt with crypto-marketers on a regular basis in his capacity as Copywriter at Ventrix Media. At AMBCrypto, Victor’s focus is on assessing the real effectiveness of both on-chain and off-chain developments on a project and its community sentiment.
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