Bitcoin had its most profitable quarter with a record dollar for dollar, rising more than $ 25,000 in the first quarter alone. Despite the huge uptrend, the price move has left the first bearish divergence in terms of quarterly time frames in the asset’s history.
To make matters worse, March has been the historically worst month for the top cryptocurrency over the past decade. Could the bearish signal combined with this factor result in a much larger correction over crypto?
Bearish divergences pile up quarterly against Bitcoin
2020 was the year of the pandemic and the year of Bitcoin. During that time, Bitcoin price spent the first three quarters of the year between $ 4,000 and $ 10,000, but when that range was finally broken towards the end of the year, there were fireworks in the fourth quarter.
The fourth quarter is traditionally a time to enjoy the fruits of your labor with Thanksgiving and other holiday celebrations. This year was particularly fruitful for investors who survived the long crypto winter.
Related reading | Bitcoin shakes off dollar rebound, but beware of the upcoming bear phase
With an unprecedented negative year in the rear, the exuberance of celebrations has lasted well into the first quarter of 2021, bringing Bitcoin to its best quarter ever in terms of total dollars won.
An impressive $ 18,000 was added to the price per BTC in the fourth quarter, while an additional $ 28,000 was added to the price of each coin in the first quarter of 2021 alone, with more than two-thirds of March left.
However, according to a crypto analyst, Bitcoin price would have to rise another $ 20,000 to keep indicators high enough to end the month without falling victim to multiple bearish deviations on the quarterly candle.
Several popular trading indicators are signaling a bearish divergence | Source: BTCUSD on TradingView.com
Why chances are a correction, not a continuation of crypto
The keen-eyed trader checking the not-often-watched timeframe could see declining divergence in the Relative Strength Index, RSI, On-Balance Volume, Chaikin Money Flow, Money Flow Index, Commodity Channel Index, and the Accumulation / Distribution Technical determine indicators.
Related reading | Why March is the bloodiest month in Bitcoin history
In the past, those many technical indicators stacking with bearish deviations in Bitcoin resulted in one of the strongest uptrends in cryptocurrency history.
The bearish divergence on the RSI is clear as day. | Source: BTCUSD on TradingView.com
The graph above shows how clear the downward divergence is. In order to avoid these signals confirming themselves with a bearish reversal in the short term, the Bitcoin price would have to rise further by “20,000 to 30,000 USD” before the end of March.
However, March is historically the worst month Bitcoin has ever seen, and that makes the likelihood of such a further move unlikely.
On the other hand, this is Bitcoin and this bull market is the most powerful yet, so anything is possible, including another move from $ 20,000 to $ 30,000 in less than 20 days.
Featured image from Deposit Photos, Charts from TradingView.com