After being rejected by a medium-term downtrend line for months, Bitcoin finally broke through that barrier and is now trying to break above the 100-day moving average.
However, the momentum has yet to turn bullish, and BTC has formed a bearish reversal pattern on the lower time frames. So far, there are no signs of a reversal in price action.
Bitcoin has formed a bearish triangle pattern and found support at the lower border near $18,000 until recently breaking out of the triangle.
Typically, a breakout from the upper edge of a bearish triangle is considered a bullish signal for the price. However, the market conditions are slightly different now, with some notable resistance levels in the short term.
The 100-day moving average at $20.8K is a major hurdle for Bitcoin as the price struggles to hold above that level after several failed attempts.
If the price manages to surpass this level, optimism may return to the market. Nonetheless, Bitcoin is more likely to be rejected at this level and plummet based on lower time frame price action.
4 hour chart
There is a clear imbalance between $20.9K and $22.1K. Prices have experienced a spike recently and have reached the region.
Often, the market uses the imbalance to launch its next expansion move. However, the price has formed a bearish reversal flag pattern and reached an upper limit.
Meanwhile, a closer look at recent price action reveals the formation of a double top reversal pattern. Furthermore, there is a bearish divergence between the price and the RSI indicator on the 4-hour time frame.
Combining all the above signs, there are many bearish signs for BTC in the coming days. Therefore, a rejection at the $21,000 level leading to a plunge into the $18,000 range would be the most likely scenario for Bitcoin in the near term.
Bitcoin Achieved Cap – UTXO Age Range (%)
It has been almost a year since Bitcoin recorded its new highs at the $69,000 level and during the beginning of the current bearish cycle. As mentioned above, price action has yet to turn to a bullish reversal structure.
At the same time, tensions such as the epidemic and inflation have also brought about various periods of instability. As such, uncertainty and doubt remain the dominant sentiment in financial markets.
The chart below illustrates a macro view of Bitcoin supply dynamics, based on the Realized Cap – UTXO Age Range (%) metric, which represents groups of coins based on their lifetime and their share of the total Realized Cap.
The market is in a heavy position, with a steady rise in the number of coins over the past six months. This accumulation and HODLing behavior is expected during the bearish phase, which shows that many investors still believe in Bitcoin.
The indicator shows that during this particular bear market, despite the recent sharp price drop below $20,000, the accumulation momentum is still higher than in the previous bearish phase.
This suggests that for many market participants, Bitcoin is still considered a long-term asset of value, and the market will see a major bullish run after it finds a long-term bottom.
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Cryptocurrency charts from TradingView.
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