Bitcoin, Cryptocurrency, News & Updates

Bitcoin pierced the ‘Ichimoku Cloud’ – Should you be concerned?

After an action-packed weekend, the dust is settling. Ideas vary; news and rumors swarm. The data seems to suggest rough times ahead.

To make sure we’re getting everything straight, let’s expand on this.

Bitcoin’s Weekend Of Wonders

The Bitcoin (BTC) network’s hash rate fell by half following a series of blackouts in China, making us think about centralization. Also, in the Asian market, a single wallet sold 8K BTC. Plus, fear took over when an anonymous account said that the U.S. Department of the Treasury was about “To charge several financial institutions for money laundering using cryptocurrencies.” This, of course, didn’t happen.

On Sunday, a harsh fall saw Bitcoin going from $60K to $51K. That created liquidations worth over $10 billion in futures positions, a new record that almost doubles the previous one. And, about 90% of those were forced liquidations on long positions. 

As claimed by Binance:

A liquidation is triggered when:
Collateral = Initial Collateral + Realized PnL + Unrealized PnL < Maintenance Margin

The outlook for the week ahead is intriguing. Bitcoin already bounced to the $55-56K range, cryptocurrencies’ total market cap is well above the $2T mark, and the market seems healthy. According to some analysts, this movement is precisely what Bitcoin needed:

You actually want bitcoin to take another leg lower this month. That’s ideal bc it kicks off a new $200k cycle run starting May.

The Ichimoku Cloud Piercing – and Its Implications

All of the circumstances above caused the piercing, and holding above the cloud is generally considered a good sign.

Nevertheless, all of this might’ve been inevitable. To further drive the point of a healthy market doing what it’s supposed to do, let’s quote our sister site NewsBTC:

The cloud in the Ichimoku indicator is best described as a support line. If an asset goes too far high up the cloud, it could mean that it is overbought.

But if Bitcoin is steadily recovering within the cloud, it suggests it sees healthy and stable accumulation.

Will Bitcoin steadily recover within the cloud this time? We’ll have to wait and see. Especially considering that the piercing of the cloud didn’t happen in all exchanges. For example, notice how the candles only slightly touch the border of the cloud – the leading span A – in this chart from Bitbay:

BTC price chart on Bitbay | Source: BTC/USDT on

And compare it with Binance’s chart for the same period. We can see the piercing of the Ichimoku cloud here:

BTC price chart on Binance | Source: BTC/USDT on

It seems like the weekend’s sell-off wasn’t as intense in some of the exchanges. It looks like there weren’t enough orders of liquidity on BitBay to generate the same effect. 

What Does Piercing The Cloud Indicate?

It should be noted that the cloud is considered an excellent indicator for trending markets and a poor one for consolidation periods. Is Bitcoin in a trending market, or is it consolidating? In general, the Ichimoku Cloud represents support and resistance. The piercing can indicate a reversal in trends, but a period of testing support and resistance inside the cloud usually follows it. 

The reversal is in no way guaranteed and, after that testing, depending on its results, the market can do the opposite and skyrocket.

Only one thing’s for sure, in traditional markets, it’s advised not to trade while the asset is inside the Ichimoku Cloud. But we’re not even there yet. Let’s keep our eyes glued to the charts and see what happens. The week ahead is going to be interesting.

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