Bitcoin’s (BTC) recent performance has been a source of concern for its investors, as the world’s largest cryptocurrency struggles to maintain its upward trajectory. While the currency recently recorded a 12-month high slightly above $31,000, it is now facing potential profit-taking as miners signal a massive $128 Million move.
Bitcoin Bulls Brace For Impact
According to Yan Allemann, co-founder of Glassnode, the miner’s transfer could lead to significant sell-off pressure in the market. This could cause friction in the current bull run, which has already seen Bitcoin struggle to hold steady at the crucial $30,000 support line.
Adding to the uncertainty is that Bollinger Bands, a technical analysis tool used to measure volatility, remains tight despite the low volatility. This has been shown to lead to abrupt market moves in the past, which could cause further complications for Bitcoin bulls.
The support at $30,000 is crucial for the revival of the uptrend, and investors are now anxiously watching to see how the market reacts to the miner’s move. While Bitcoin has faced similar challenges in the past and managed to overcome them, the current situation is causing some concern among market observers.
Furthermore, Bitcoin’s current price stagnation is reflected in its Average Directional Index (ADX) on the daily chart, which is set to spike downward.
This ADX movement suggests that Bitcoin’s trend for the next 10 days could be to the downside. This development raises the possibility that Bitcoin might either consolidate for the next week-and-a-half, revisit the $29,600 support line, or even drop further to the $28,300 level if the downside movement persists.
Either way, it has been a common price action for Bitcoin for the majority of the year to experience periods of correction or consolidation before taking another uptrend. The current ADX movement and potential downside trend are no exception to this pattern, as seen in the chart above.
As Bitcoin corrects or consolidates, the liquidity of late-long positions taken from these levels is likely to be absorbed. This is a natural part of market cycles, and it is not unusual for Bitcoin to experience this type of price action.
Once the correction or consolidation phase passes and the late longs liquidity is taken from these levels, Bitcoin may be poised to begin another uptrend. This could potentially result in a 6,000-point uptrend, which has been seen in previous cycles.
BTC Faces Further Decline
Yan Allemann also pointed out other technical indicators that suggest a short-term reversal in Bitcoin’s price. The Relative Strength Index (RSI) peaked at 72.92 over the weekend, which is within the limit of overbought territory. The RSI has since remained in the upper and lower levels, which indicates a possible decrease in buying pressure.
Furthermore, the double-top pattern and the Moving Average Convergence Divergence (MACD) also suggest that a short-term reversal in Bitcoin’s price may be imminent. The MACD being overbought, along with the RSI at the top level, adds to this likelihood.
However, there are also positive indicators for Bitcoin’s price. The funding rates remain positive, reflecting bullish sentiment among investors. Additionally, Bitcoin mining stocks have been moving higher, suggesting the potential catalyst for the next major move in Bitcoin’s price.
As of now, BTC trades at $30,500, slightly up by 0.5% in the last 24 hours but failing to conquer the $31,000 mark.
Featured image from Unsplash, chart from TradingView.com