A technical indicator, money flow index (MFI), that uses both the price of bitcoin and the trading volume shows that the cryptocurrency may have bottomed in December. However, as per Alex Sunnarborg of Tetras Capital, Bitcoin is yet to bottomed out.
As per Alex, the cryptocurrency industry requires a comprehensive cleanup for removing ‘bad actors’ and to increase the mainstream investor confidence in the fluctuating market. The Bitcoin is falling from an all-time high of $19,700 in mid-December 2017, to the level of $6,000 during February 2018, which reflects that the long-term bottom has been made for Bitcoin price. As per Sunnarborg, the market needs some clarity about the direction to accelerate the bottoming process.
Meanwhile, Sunnarborg has identified the VanEck/SolidX Bitcoin ETF proposal that may accelerate the bottoming process if it had been rejected. For Sunnarborg, there are lot of variables, including potential launches (Fidelity, Bakkt) and ETF approvals, which may act as catalysts for the actual Bitcoin bottom.
Bitcoin Price Technical Indicators
The money flow index (MFI), or volume-weighted relative strength index, is used for identifying the buying and selling pressure and the indicator oscillates between zero to 100. BTC shows a long-term bullish reversal after breaking the level below $6,000 on November 14 and then it reached a 15-month low of $3,122 on December 15. The 14-week MFI also has fallen from the high of 43 in mid-November, which had confirmed the sell-off in prices.
The bullish divergence is generally considered as an early sign of a bearish-to-bullish trend reversal. If we go as per this indication, BTC after falling for record six-month gained 10 percent in February and the MFI also rose from 25 to 44, which means trend reversal.
Other indicators like the moving average convergence divergence (MACD) and the bearish crossover of the 50-week and 100-week moving average are also signaling long-term bearish exhaustion. However, these tools, do not take into consideration the trading volumes. Therefore MFI, is a more reliable technical tool.
In 2017, the global market for cryptocurrency was valued at $574.3 million and is projected to be worth $6702 million by the end of 2025. According to a report by Transparency Market Research, the overall market is projected to grow at a CAGR of 31.3% during the period 2017 to 2025,.
Additionally, Nasdaq has recently signed the partnership with Brave New Coin (BNC) to include Bitcoin and Ethereum price indices developed by BNC in the former’s trading index catalog. As per Sunnarborg, the crypto data requires to become more trustworthy to combat price manipulation.