Bitcoin was unable to go above $43K despite the most recent attempts to do so. The price has returned to $42,000. In this analysis, we look at the key technical challenges before the cryptocurrency heads for a recovery to $50K.
In the long term – the daily
In the recent past, Bitcoin was successfully supported by the local level around $37K and started a bullish rally. However, the 100-day moving average has been the main barrier to price exploring higher levels. BTC is currently attempting another attack on the moving average, and if it succeeds, the $46K supply zone will be the next challenge.
There are two main resistance levels in Bitcoin’s path to the $50K-$60K channel in higher time frames; The first is the $46K supply zone, a key resistance zone, and based on the lower time frame behavior, it’s worth keeping an eye on. The 200-day moving average is the second. The trend reversal will be confirmed if Bitcoin breaks above the moving average, then another bullish rally is expected.
Short term – 4H
As can be seen from the chart above, after finding support at $37K, the price is forming higher highs and higher lows, which is a clear sign of a healthy bullish rally. However, a valid breakout above the $46K supply zone will be the final confirmation of the reversal. There are two possible scenarios for the coming days:
1) Bitcoin continues to create higher highs and higher lows and breaks above the $46K supply zone, consolidating in the form of a pullback to the referenced region to validate the breakout.
2) Bitcoin is rejected from the main supply zone and plummets to lower demand/support areas, triggering another round of liquidation in the futures market. In the lower time frames, the key support levels will be the bottom of the range around $34K and the bottom trendline of the bearish continuation correction flag.
Oversee financing percentage
Financing rates were significantly positive, even going past 0.1 during the 2021 bull run and until the $64K all-time high. These high levels show that the market was overbought and that the bulls craved aggressively as the price increased.
The market had overheated and there was a long press lurking. The price started to collapse from the high of $64K, liquidating the over-leveraged long positions, and this cascade has resulted in a crash towards the $30K level. The bears were actively shorting BTC anticipating that the bull market was over, and this major flush-out was followed by a few months of negative funding rates.
Funding rates have hovered around zero and have been mostly negative in recent months, after another significant decline, indicating bearish sentiment in the futures market.
Today, however, sentiment does not appear to be as negative as it was during last year’s collapse. This could indicate that the market is still not scared enough, and lower prices are not out of the picture or there is less panic now than last year at the $28K bottom, due to less excitement from the $69K in November. the all-time high compared to $64 in April 2021.
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