Bitcoin Has Its Worst Week Since Black Thursday; Further Declines Ahead

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Bitcoin has dropped nearly 10% in a week, marking its worst weekly performance since Black Thursday in March.
The losses came after the cryptocurrency recovered from a low of under $4,000 to a high of $10,000.
Profit-taking, miner capitulation, and dubious macroeconomic forecasts all point to greater drops.

Bitcoin made a little recovery at the start of this week after finishing the previous one in the negative.
The leading cryptocurrency declined nearly 10% to $8,715 at the end of the seven-day period. Bitcoin’s weekly performance has been on the decline since March 2020. The cryptocurrency was trading about $8,773 on Monday morning, up 0.66 percent.
The losses were part of a broader downtrend that began following bitcoin’s 161.25 percent recovery from its March lows below $4,000 in March.
The cryptocurrency reached a high of near $10,000 before plummeting due to a strong profit-taking mentality among traders. A number of fundamental and technical reasons also contributed to the current short-term pessimistic attitude.


Capitulation of Bitcoin


The Bitcoin sell-off, according to Charles Edwards, digital asset manager of Capriole Investments, is due to miner capitulation, with block validators selling their bitcoin awards following the third “halving.”
“This capitulation is nearly analogous to the 2012 and 2016 halving capitulations (both within 21 days of the halving),” he continued, revealing that bitcoin lost 1.8 percent and 13.8 percent, respectively, after the two previous halving events in 2012 and 2016.
Hash Ribbons scans reveal Bitcoin capitulation | TradingView.com is the source for this information.
Mr. Edwards based his study on the 2012 and 2016 fractals and concluded that capitulation is bullish for Bitcoin. According to the analyst, halving increases the cost of mining one bitcoin unit, which raises the retail price.


Factors of Dissension


In the midst of a bleak macroeconomic prognosis, Mr. Edwards’ bullish posture emerged.
Since March, Bitcoin has largely tracked the global stock market’s losses and recovery. As a result, it appears that investors sold their crypto assets to make up for losses elsewhere. The method resulted in an astonishing link between bitcoin and traditional risk-on investments.
It’s also obvious in Bitcoin’s inability to close above a long-term technical resistance level in the chart below, which is represented by a Descending Trendline. During its rebound, the cryptocurrency challenged the blackened ceiling several times, but no new buyers emerged at the top at $10,000.
As a result, there was a significant adjustment to the negative.

Near the darkened trendline, the most recent pullback confirmed a strong bearish influence. Investors are also hesitant to enter the bitcoin market at higher highs, as evidenced by this.
Meanwhile, traders are monitoring to see if the cryptocurrency can draw buyers at the support of its 50-weekly moving average (blued wave).
On general, investors are wary of placing wagers in unpredictable markets like Bitcoin and even equities. If cryptocurrency breaks bearish below the 50-day moving average, it risks further falls to $6,800 or below (the red bar).

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