Tony “The Bull” Severino, head of research at NewsBTC and certified CME, has identified an “Evening Star” candlestick pattern on the CME bitcoin futures monthly chart. This formation, which traditionally indicates a possible trend reversal, is forming at a critical point for bitcoin.
According to Severino, there could be telltale signs suggesting that bitcoin's rally could end as momentum fades.
The Evening Star Formation: btc Bull Run Over?
Although there is concern that the pattern is forming on the CME bitcoin futures chart, it is not present on the BTCUSD spot chart on ordinary Binance or Coinbase charts, for example. Consequently, the lack of uniformity in the graphs has also left Severino questioning the reliability of the signal.
While the Evening Star pattern suggests a possible reversal, Severino warns that bitcoin could still reach higher highs in the coming months before peaking and reversing. However, the analyst highlights that predicting the exact timing of these events is a challenge.
Based on candlestick analysis, Severino predicts that bitcoin could peak in the next two quarters, possibly in the mid to late third quarter of 2024.
At the time of writing, bitcoin is trading around all-time highs. After last week's cooldown, the currency rebounded strongly over the weekend, erasing some losses. The coin is technically within a bearish breakout formation, trading below the 20-day moving average, clearly on the daily chart.
For the uptrend to continue and extend from the formation on the daily chart, btc must break above $70,000. The validity of this bullish trend will be strong if the advance comes with expanding trading volume.
Severino also notes that the bull leg will be valid and the Evening Star formation will not be valid if there is a strong close above $74,000 at the end of the month. bitcoin prices peaked around $73,800 in early March, driven by growing demand, especially for spot bitcoin ETFs.
bitcoin spot ETFs see more outflows
Despite the potential for the rally to continue, some fundamental factors pose challenges. In particular, outflows from spot bitcoin exchange-traded funds (ETFs), particularly the Grayscale bitcoin Trust (GBTC), are increasing. Rumors suggest that bankrupt cryptocurrency lender Genesis could be liquidating its GBTC holdings, adding more selling pressure to the market.
By March 22, spot bitcoin ETF issuers had experienced Departures for five days in a row, according to Lookonchain data. However, as GBTC sees outflows, BlackRock's IBIT continues to attract more clients seeking exposure to btc.
Featured image from Canva, TradingView chart