Bitcoin returned to $40,000 as it rebounded from the $30,000. The first crypto by market cap managed to hold off the bears and retraced some of this week’s losses.
Similar Reading| TA: Ethereum Faces Key Challenge, Why Fresh Decline Still Possible
At the time of writing, BTC’s price trades at $40,200 with a 3% profit in the last 24-hours.
As Bitcoin continues to trade in a rangebound manner in longer timeframes, the general market sentiment seems pessimistic. Over the last months, the cryptocurrency traded in the $30,000s to $60,000s range.
Unable to break above local resistance, located at $45,000 and $48,000, market participants seem to have lost conviction over short-term appreciation unless BTC’s price can break above those levels.
A recent market update states that there has been a significant increase in demand for this product. posted by Material Indicators (MI), in the current BTC’s price range, the area between $36,500 and $40,500 is the most critical. These levels operate as a consolidation range and as a zone that has a “marked prior accumulation phase and distribution”.
In other words: These levels are crucial for Bitcoin as they offer clues to potential price movements. Below you can see that since 2021 when Bitcoin reaches those levels, it either tends upwards at the top (around $69,000), or falls to retest support.
In order to discover BTC’s current phase, MI analysts looked at the cryptocurrency’s heatmap along with three important moving averages. This is the 100-day average that is located around $36,000. The second, at $21,000, is an average of 200 moves per day, while the third, at $45,000, is a 50-moving average.
Below is the chart that the analysts showed:
Zooming in on the 3 Day chart shows that crossings below the 100-day MA by the 3-Day 50MA have caused rallies. Additionally, interaction with the 3-Day 200 MA can either lead to a rally of breakdown to macro bottom. BTC checked every box this week.
Bitcoin to See Further Losses
Bitcoin and other assets that are risk-on could suffer further losses due to the negative macroeconomic outlook. Therefore, the analysts said the situation could get “worse”.
Material Indicators stated that BTC’s current price action could be a way for large investors to increase their short positions before a re-test of the macro bottom around the 200-day moving average. They advised all market participants to remain cautious. The following was added by them:
These are distribution rallies that sell short or increase the price of bitcoin until it regains its key moving averages. More volatility is expected to enter the Monthly Close/Open.
From MI’s analysis, leverage traders should be careful of upcoming volatility or should check their expectations of an immediate reclaim of the top of the range.
Related Reading: Bitcoin Futures Base Nears One Year Lows. How will This Affect BTC| Bitcoin Futures Basis Nears One-Year Lows, How Will This Affect BTC?
However, the majority of market participants seem to expect more downside. These participants could be vulnerable to a short squeeze, which would push Bitcoin back up to its previous highs.