The situation in the cryptocurrency market has changed since China stepped up the cryptocurrency war, escalating it from a cold war into a full fledged war in May. The Chinese government decided to close Bitcoin mining facilities in the country and prosecute more than 1,000 individuals who, according to Chinese authorities, were involved in Bitcoin fraud, but we all know this was merely a step to deter people from turning to cryptocurrencies, and away from the mainstream fiat currencies.

This turned the sentiment quite bearish in this market during May and June, but the decline seems to have stalled this month. Bitcoin traders and miners were hopping that the bullish trend would resume at some point, after the crash stopped, but they have been disappointed time after time, as every attempt to turn the main crypto bullish again has been in vain, so the sentiment in the cryptocurrency market remains bearish. You can find a more detailed explanation in our 2021 Bitcoin forecast.

Bitcoin Live Chart

Bitcoin’s Price Action Still Suggest that the Trend is Bearish

We have seen many attempts by buyers since mid-May, but they have all failed, and moving averages have turned into resistance in larger time-frames. In the H1 chart, we can see that the highs have been getting lower since the beginning of July, which suggests that buyers are giving up lower after every attempt, indicating exhaustion on their side.

We also see that the declines are taking up only a fraction of the time it takes for buyers to push the price higher. Today, sellers wiped out the gains of the last two days in just a few hours, and if the selloff continues, they will bring the BTC/USD price down to $32,000, which was the low early last week. This in itself is the biggest bearish sign in the crypto market. Some cryptocurrencies are really giving bullish signs, such as Maker, Aave etc, but the overall sentiment will remain bearish, as long as sellers are stronger than buyers.

All declines have happened in a much shorter time than the bullish periods

When the bullish periods turn out to be longer and bigger than the periods of decline, it will be a strong sign that the bearish momentum in cryptocurrencies is coming to an end. So, we will have to follow the price action, in order to see when the tide will shift, Until then, we have to trade with much caution, as the uncertainty continues, and the downside is really taking charge.