The Bitcoin market is often full of surprises and last week was no exception. Bearish sentiment was dominant, and the cryptocurrency seemed to be days away from creating a new lower low. However, a significant price rally has changed the view from a technical aspect.
Technical Analysis
By: Edris
The Daily Chart
Looking at the daily timeframe, Bitcoin has bounced back from the key $18K support level once more, and rallied impulsively above the $20K mark last week. The price has currently reached the 50-day and 100-day moving average lines, which are converging around the $22K area.
If the price breaks these moving averages to the upside, a crossover between them would occur, which is a strong bullish signal. However, in order for the market to be considered bullish in the mid-term, a breakout above the significant trendline demonstrated on the chart and the $24K resistance level would be necessary.
On the other hand, if the price gets rejected from either of the mentioned static and dynamic resistance levels, a return towards the $18K level and even a breakout below it would be probable.
Source: TradingView
The 4-Hour Chart
On the 4-hour chart, The price has broken above both the bearish trendline and the $20,500 level after rebounding from the $18K area.
Currently, the cryptocurrency is testing the $22K resistance level, and a bullish breakout from this level would pave the way toward $24K. However, the trend seems over-extended. This suggests a bearish pullback toward the $20,500 level – which has now turned into support.
Additionally, the RSI indicator, which had been signaling a massive bullish divergence before the reversal, is now demonstrating a clear overbought signal with values above 70%. This further boosts the probability of a short-term pullback.
Source: TradingView
Onchain Analysis
By Shayan
Binary Coin Days Destroyed (CDD) Metric
The long-term holders are a vital cohort among market participants. Hence, tracking their behavior might help in anticipating the market’s direction.
The Binary Coin Days Destroyed metric can be used to identify the long-term holders’ activity. It points to 1 if Supply Adjusted Coin Days Destroyed is larger than the average Supply-Adjusted CDD and points to 0 if not.
The following chart depicts the Binary CDD metric (14-day SMA) and Bitcoin’s price. A spike in the metric indicates potential selling pressure from long-term holders. Each time the metric printed a surge, the price dropped significantly.
Currently, the metric and the price have both experienced a massive rise. Long-term holders might find this rebound an excellent opportunity to distribute their assets and manage their exposure to the market.
Source: CryptoQuant SPECIAL OFFER (Sponsored) Binance Free $100 (Exclusive): Use this link to register and receive $100 free and 10% off fees on Binance Futures first month (terms).
PrimeXBT Special Offer: Use this link to register & enter POTATO50 code to receive up to $7,000 on your deposits.
Disclaimer: Information found on CryptoPotato is those of writers quoted. It does not represent the opinions of CryptoPotato on whether to buy, sell, or hold any investments. You are advised to conduct your own research before making any investment decisions. Use provided information at your own risk. See Disclaimer for more information.
Cryptocurrency charts by TradingView.
Source
