Bitcoin’s price has been struggling to break above a significant resistance level and is currently experiencing a pullback, following the recent red days on Wall Street. Is it just a short-term correction or a beginning of a new bearish leg?
Technical Analysis
By: Edris
The Daily Chart
On the daily timeframe, the price dropped shortly after getting rejected from the critical $25K level. The 50-day moving average around the $22K level would be the first likely support level, followed by the 200-day moving average around the $20K psychological support area.
If these dynamic support levels fail to hold, a further drop toward the $18K level would be imminent. However, if the price rebounds from either of these levels, another retest and potential breakout above the $25K resistance zone would be highly probable.
The RSI indicator, which has signaled the recent rejection with a clear bearish divergence, is trending around the 50% threshold, indicating the momentum equilibrium on the daily timeframe.
The 4-Hour Chart
Analyzing the 4-hour chart, the price has declined after multiple rejections from the $25K area and is heading toward the $22,500 support level. A breakdown of this level would potentially lead to a deeper decline toward the $20K and even the $18K level in the coming weeks.
On the other hand, the RSI is getting close to the oversold zone in this timeframe, which could result in a temp rebound from the $22,500 level, which might lead to a break above the $25K level.
A breakout above the $25K level would be followed by more bullish price action in the coming weeks, and the bear market could finally be considered over from a technical standpoint.
On-Chain Analysis
Bitcoin Miner Reserve
Bitcoin’s price has risen lately, and the market sentiment is becoming more positive. However, the miners, a key cohort in the bitcoin market, have yet to show any bullish behavior.
The following chart demonstrates the miner reserve metric, which measures the amount of BTC in miners’ wallets. This metric has been declining over the last few months. Some miners are finally capitulating, and others are selling their BTC to provide liquidity and cover operational costs.
If this trend continues, the selling pressure could overflow the market with excess supply and lead to another price decline.
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Cryptocurrency charts by TradingView.
Source: https://cryptopotato.com/following-bitcoins-latest-correction-this-is-the-crucial-level-it-must-hold-price-analysis/