The market is trying to recover from the $18K support. There is however significant resistance around $20K. As the market remains largely undemanded, the bearish phase looks far from over.
The Daily Chart
For the past five years, the significant resistance to Bitcoin’s price has been the descending trendline (currently at $20.5K), Bitcoin has made a modest recovery and is now at the trendline for the 4th time. This level is also in line with the 50-day moving mean (at $20.1K), which represents a critical resistance for the price.
BTC will face significant resistance at $21K due to the overlap between the trendline and the 50-day moving Average. To retest the $25K primary resistance, it must be broken.
However, the market sentiment and decreased momentum suggest that the price is more likely to be rejected at this critical point and suffer another drop.
The 4-Hour Chart
Bitcoin is stuck between $18K support and substantial resistance at $25K, as stated. The cryptocurrency is currently advancing towards the upper trendline of the descending wedge.
Bitcoin is now forming a double-top pattern. This is a well-known bearish pattern. Bitcoin could fall back to $18K if the neckline breaks. Given the strength of the $20K-21K range and formation of this double-top structure, it is likely that the price will not surpass the trendline and plummet towards lower levels.
Analyse of the On-chain
Bitcoin Net Unrealized Profit/Loss
The gruesome downtrend in Bitcoin is driving more holders underwater. A large number of investors still hold onto their coins at loss despite the fact that it’s falling.
Many people could feel pressured to sell their assets to avoid further losses. This scenario would make it easy for smart money to acquire Bitcoin at low prices and large amounts. This is why bear market bottoms occur, when the majority of market participants are losing.
The NUPL metric can be used to assess the unrealized profits or losses of investors. It could also be used to establish the price range at which the bottom might form. The chart shows that NUPL is currently located in the same area where bear market bottoms have occurred previously.
Although the price may drop further, the NUPL metric suggests that it could be very close to the bottom.
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Marla Brooks – Financial Analysis
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