Traditionally correct ‘momentum indicator’ hints at potential Bitcoin breakout forward

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Bitcoin (BTC) may see a “large bullish transfer” if a traditional set off from the 2021 bull run repeats this week.

In a tweet on Dec. 16, on-chain analyst Matthew Hyland, recognized by the Twitter deal with Parabolic Matt, drew consideration to Bitcoin’s momentum indicator.

Momentum indicator hints at potential “large bullish transfer”

Whereas nonetheless underneath $50,000, Bitcoin has already damaged out of a long-term downtrend on the momentum indicator, which measures closing costs in opposition to these from a interval previously.

Two such breakouts have occurred this yr, and after every one, BTC/USD went on to see appreciable upside.

“The earlier two instances it broke out of a multi-month downtrend this yr, an enormous bullish transfer adopted,” Hyland wrote as a part of feedback.

BTC/USD vs. momentum indicator annotated chart. Supply: Matthew Hyland/ Twitter

Whereas not a assure of “up solely” value motion, the momentum knowledge joins a lot of on-chain metrics flashing bull alerts this month — a listing that keeps growing.

Hyland is thought for his extremely optimistic value forecasts, and final month caused a stir by predicting that Bitcoin would hit $250,000 in January 2022 whereas invalidating one of many well-liked stock-to-flow value fashions.

In additional evaluation, he famous that each the momentum indicator and Bitcoin’s relative energy index (RSI) on day by day timeframes are mimicking conduct from September, when the market put in an area backside earlier than rising to present $69,000 all-time highs.

Greenback dives put up Fed

Spot value motion was in the meantime quieter on Thursday, Bitcoin lingering round $49,000 regardless of a conspicuous drop within the U.S. greenback.

Associated: Bitcoin sheds ‘dumb money’ as retail buys most BTC since March 2020 crash

The U.S. greenback forex index (DXY), which measures USD in opposition to a basket of buying and selling associate currencies, reversed its prolonged bull run final week, with Thursday seeing a pronounced comedown, knowledge from TradingView exhibits.

DXY 1-day candle chart. Supply: TradingView

Historically inversely correlated with BTC, DXY’s drop follows a boost for crypto and equities alike courtesy of the Federal Reserve.