The past seven days had been a blast for Bitcoin, after soaring to the top of the trading range between $34K and $46K. However, it got sharply rejected, reaching the resistance zone amid the $45K area, along with an ascending trendline.
Long-Term: The Daily Chart
Right now, there is potential selling liquidity above the $46K area and considerable buying liquidity below the $35K area.
Moreover, there is an apparent divergence between the price and the RSI on the 1-hour timeframe, which has led to the correction we witness now.
The price needs to form a higher low to continue the uptrend. Furthermore, Bitcoin has broken above the multi-week descending trendline (marked purple on the following chart), then got rejected by the 100-day moving average line, and now is retesting it as support. If support holds, then another bullish leg might be seen.
Short-Term: The 4-Hour Chart
On the 4H timeframe, two apparent imbalance areas are located in the $41.5K – $42.8K and $38.6K – $40.6K regions. Both might serve as possible support.
As many technical analysts might agree, the market will almost always correct those imbalances on occasions when price increases dramatically. As a result, It can be expected that the market will see some volatility in the near term, with liquidity being absorbed in lower price levels before a possible continuation to the upside.
Onchain Analysis: Realized Cap – UTXO Age Bands
Over the past two years, the most dominant sentiment of international affairs has been “uncertainty.” And there is one place that hates uncertainty more than anywhere else: Financial Markets.
From a global pandemic to inflation-related concerns and, recently, a geopolitical conflict – all have been catalysts for many volatile phases over the past two years.
In these periods of uncertainty, it is often advised to zoom out and observe the big picture. The following chart demonstrates, for instance, a big picture of Bitcoin’s supply dynamics since its first block.
This metric is called Realized Cap – UTXO Age Bands (%), and it visualizes different groups of coins based on their ages (the last time they were moved) and their share of the total realized cap. Here, coins aged from 3 months to more than ten years are shown and separated by different colors specified in the chart’s legend.
In summary, a rise in these age bands shows HODLing and accumulation (green), and a drop in them shows selling and distribution (red) by the mid-term to long-term holders.
The market is currently in an accumulation phase, with the number of coins last moved more than three months ago increasing rapidly. This kind of behavior by the holders is promising and signals that despite the short-term volatility, the continuation of Bitcoin’s bullish megatrend is somehow inevitable.
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Cryptocurrency charts by TradingView.