By CCN.com: According to a cryptocurrency trader, a technical indicator of bitcoin is signaling a potential downturn in the market for the first time since December 2017.
The indicator, known as the Relative Strength Indicator (RSI) bearish divergence, signals a bearish downtrend and a decline in momentum.
The bitcoin price has slightly declined in the past week (source: coinmarketcap.com)
The RSI is typically utilized by traders to evaluate the momentum of the trend of an asset or a market. A bearish divergence flashes when the price of an asset, in this case bitcoin, rises while the RSI heads downwards, suggesting a lack of momentum.
Although the RSI bearish divergence does not necessarily indicate that the bitcoin price would decline rapidly in the short-term, it shows that the asset would need to demonstrate significant strength to avoid a trend reversal.
Can Bitcoin Overcome Short-Term Vulnerability?
The decline in the momentum of bitcoin was not triggered by technical factors. Rather, the Tether (USDT) scandal and the office of the New York Attorney General filing of a lawsuit against iFinex, the company that oversees Tether and Bitfinex, led the bitcoin price to plunge by 7 percent.
The office of the New York Attorney General alleged Bitfinex of mismanaging $850 million of Tether’s cash reserves in an attempt to “hide” the company’s loss.