Bitcoin is once again back above $40,000. Will it manage to hold these price levels or should we expect further declines?
What’s the scenario?
In the last of our analyses, we highlighted the upward channel that was confirmed by the behavior of the price of the leading cryptocurrency. We also noted signs of oversold BTC on the stochastic RSI, as well as a bullish divergence on the RSI itself. These factors triggered the uptrends that we can currently observe.
On the other hand, it is worth noting that with each successive decline in value, it is being bought back faster and faster. This is evidenced not only by the higher price bottoms, but also by the downward drawn candle wicks. On days when these are visible, we also see noticeably higher trading volumes, although compared to historical periods, they are not stunning. A bullish crossing is coming on the MACD indicator, which has the right to trigger the continuation of the upward movement.
Despite the mentioned positive aspects, we should not lose sight of the ascending channel, in the range of which Bitcoin has the right to stay for longer. It represents an area of consolidation, before further movement. Let’s look at the on-chain data and determine whether this bearish pattern will play out downward or upward.
Interesting information is shared with us on Twitter by the whalemap profile (@whale_map). According to the data shared by analysts, whales are in the process of accumulation, which means that the current consolidation or dips are regularly bought back by them. In addition, support between $36,841 and $38,773, where their movements have been the largest so far, has been accurately identified.
This data confirms the information about the number of wallets containing more than 1,000 BTC. Their number has been steadily increasing since the beginning of April.
SOPR maintains a key level
The SOPR indicator, which we cited in the analyses a month ago, is still fighting a battle to maintain the key level 1 for further increases. Of course, we superimposed the 14-day moving average on it so as to get rid of short-term noise. This way we know that fewer and fewer investors decide to sell their assets despite the fact that they often record long-term unrealized losses.
Declines still possible?
However, there are indicators that suggest a deeper downward move is still possible. One example is the MVRV Z-Score, which seems to have a long way to go. Although it oscillates within the limits from which upward breakouts historically occurred, it is worth remembering the possibility of a complete reset of the indicator. This could occur during a deeper correction, most likely to levels well below $30,000.
A similar pattern is illustrated by another indicator, suggesting the best buying moments in history. This time it is the RHODL Ratio, which also still leaves plenty of room for areas of ultimate capitulation. In addition, a strong downtrend is being maintained here, which in its case does not encourage optimism.
The price action indicates strong buying interest, especially in whales, which can be optimistic. What is worrying, on the other hand, is the rising channel, which is definitely a bearish formation. However, it should be remembered that such ones do not always play out downwards. The on-chain data look quite bullish, but send signals of a possible continuation of declines. It seems, however, that in order for them to take place, there would have to be an additional catalyst causing them.