Comments from Morgan Creek Capital Management hedge fund manager Mark Yusko that Bitcoin could reach $500,000 in six years are heartening battered crypto bulls. They may be better served taking a look at some underlying technicals in the meantime.
The Directional Movement Index, or DMI, shows the direction of a price trend by charting the divergence between positive and negative levels. According to this indicator, Bitcoin is experiencing the largest divergence since the run-up from October to December of last year. The strength of this move is suggested by the Average Directional Index, a gauge that is nearing the pivotal 25 mark.
The digital coin has been climbing amid speculation that the first cryptocurrency ETF will be introduced, surging almost 40 percent since the start of July to around $8,000. Rumors are swirling that a Bitcoin ETF could be approved by the U.S. Securities and Exchange Commission within weeks, although its fate is still very uncertain. That’s still a good sign, however, for investors who felt the pain of Bitcoin’s drop from record high of almost $20,000 in December.
The last time the positive and negative lines was crossed on the DMI for Bitcoin on May 14, the cryptocurrency entered a negative trend and the coin fell more than 33 percent by the end of June.