Bitcoin’s price action has been largely favoring sellers throughout the past several days and weeks, with bulls unable to catalyze any strong momentum while the cryptocurrency continues facing intense selling pressure each time it attempts to push higher.
The lack of sustainable momentum seen throughout the past few days and weeks has struck a serious blow to the benchmark digital asset’s technical outlook.
Part of this weakness has come about due to the turbulence seen within the stock market, coupled with mounting strength seen by the US Dollar.
Despite not being able to break above $11,000, on-chain data indicates that the cryptocurrency is fundamentally strong, and it may only be a matter of time before it can push higher.
One indicator suggests explicitly that the crypto could be on the cusp of seeing parabolic upside.
This metric usually only dips below one key level in the months preceding a massive push higher.
Bitcoin Stabilizes Following Recent Downtrend: Stock Prices Boost BTC Bulls
Last week, Bitcoin’s price rallied as high as $11,200 before it found significant selling pressure that slowed its ascent and caused it to see heightened selling pressure.
Initially, this selling pressure only caused it to consolidate around $11,000 for a brief period, but it eventually led BTC to plunge to lows of $10,400.
This plunge was perpetuated by weakness in the U.S. stock market, which opened the week yesterday deep in the red.
Traditional investors have been growing increasingly fearful about the lack of any progress surrounding any further stimulus packages. The lack of news surrounding a potential vaccine may also be troubling some traders.
Until stocks stabilize or resume their uptrends, Bitcoin and the rest of the crypto market may continue struggling.
On-Chain Indicator Suggests Upside is Imminent
Despite being in a precarious position, Bitcoin’s on-chain strength indicates that upside is imminent.
One data analyst pointed towards the cryptocurrency’s “spent output profit ratio,” explaining that it is currently dipping below a level that historically indicates a bull run is imminent.
“Spent output profit ratio (SOPR) is dipping below one right now. In bull markets this is a buy the dip opportunity. I believe there is sufficient technical and fundamental evidence to suggest we are in the early stages of a bull market right now,” he said.
Image Courtesy of Philip Swift. Chart via Glassnode.
In the near-term, the stock market will likely continue influencing Bitcoin, but the crypto’s underlying strength may ultimately allow it to incur an uptrend of its own.
Featured image from Unsplash. Pricing data from TradingView.
