The head of Hedge Fund Telemetry, Thomas Thorntown, has been extremely accurate at predicting Bitcoin’s tops and bottoms. By employing the Tom Demark (TD) Sequential indicator, the trading veteran has been able to forecast the direction of BTC’s trend.
In mid-December 2019, for instance, while the flagship cryptocurrency fell below $6,500, Thorntown noticed the formation of a sequential 13 candlestick. Consequently, the technical analyst stated that Bitcoin was bound for a bullish reversal, which resulted in a rally to nearly $10,700.
Now, Thorntown noted in a tweet that the bellwether cryptocurrency is approaching an “overbought” territory that may trigger a price correction.
Optimism Grows as Bitcoin’s Halving Approaches
Bitcoin has managed to reclaim the $8,000 resistance level as support over the past 24 hours. The bullish momentum allowed it to recover the losses incurred during “Bloody Thursday” sending it back to the same levels as seen before the dump, according to Arcane Research.
Santiment, a crypto behavior and on-chain analytics firm, believes that Bitcoin’s recent rally is being fuelled by market participants who are growing overwhelmingly optimistic about the upcoming halving.
Despite the popular belief that the block rewards reduction event could be the catalyst that pushes BTC into a full-blown bull market right away, data suggests otherwise.
A Retracement Is on the Horizon
Soona Amhaz, General Partner at Volt Capital, recently published a graph that shows that one month after the most recent halving Bitcoin’s price was down by more than 11%. And, two months later it remained down by 6%.
Even though two years later the pioneer cryptocurrency was peaking at a high of $20,000, Amhaz highlighted that the short-term price action following this event is not always optimal.
A similar price behavior could be developing now as Thorntown estimates that a retracement is underway.
The analyst said to have removed 50% of the long position he entered when BTC was trading at $6,500. The reason behind it is that the TD setup is presenting a sequential 13 candlestick. This type of candle represents a sell signal.
Thorntown appears to be aiming for a top between $8,700 and $9,000. However, the bearish formation encouraged him to raise his stop-loss order to $7,800 and take partial profits.
Bitcoin update – removing half long position with new DeMark Sequential Countdown 13 and raising hard stop on remaining long to 7800 from 6500 entry pic.twitter.com/ZAuLB9us1W
— Thomas Thornton (@TommyThornton) April 29, 2020
Overall Crypto Market Sentiment
The Crypto Fear and Greed Index (CFGI) has sensed a shift in the emotions that market participants have about what the future holds for Bitcoin. By analyzing the sentiment from multiple sources such as volatility, market momentum, and social media, CFCI reveals that investors have moved from “extreme fear” to “fear.”
From an overall perspective, it appears that the upcoming block rewards reduction event made crypto enthusiasts forget about the havoc that the ongoing pandemic has caused in the global economies. While emotions run high, it is always wise to take profits as Thorntown did to avoid adverse market conditions.
Featured Image from Unsplash
