Bitcoin could see a price rebound towards the $57,000 level after a keen 20% drop on Monday that caused largest cryptocurrency in the market to a low of $49,000, not seen since February. Still, BTC is not unthreatening yet, as a worrying pattern has emerged on its 10-day chart.
Analysts see downward signals
According to technical analyst Ali Martinez, Bitcoin is creating rising wedge patterna bearish trend continuation pattern, often associated with further downtrends.
While BTC could see its price rise as high as $57,000 at the upper bound of the wedge, Martinez warns that investors should expect a potential breakdown that could see the cryptocurrency fall back to around $51,000.
Martinez too illuminated that one of Bitcoin’s key support levels, based on its Market Value to Realized Value (MVRV) price bands, is currently at $54,000. This level is key to preventing a more solemn decline towards the $40,000 region. Conversely, if the $54,000 support holds, the analyst sees key resistance up top at $67,000.
Another analyst, Rekt Capital, also noticed that Bitcoin is showing signs of attempting to rebound and fill a modern CME gap, with the current value of the currency up 4.5% in the past hours, ranging between $59,400 and $62,550. However, the analyst noted that a smaller CME gap had formed at a slightly lower level, between $53,700 and $54,600, which could potentially be filled by any short-term market decline.
Reasons for optimism in the bitcoin market
Amidst these bearish technical indicators, there is a glimmer of optimism as According to Ki Young Ju, founder and CEO of market intelligence firm CryptoQuant, believes several key indicators suggest the bull market is continuing despite the recent correction.
According to Ju, one key sign is the recovery of Bitcoin’s hashrate, a measure of the computing power dedicated to the network. Ju says the miner capitulation is almost complete, with the hashrate approaching record levels.
This is significant because the U.S. mining costs are around $43,000 per BTC, indicating that the hashrate will likely remain stable unless prices drop below this level.
Additionally, Ju observed a significant inflow of Bitcoin into custodial wallets, indicating that enormous institutional investors, or “whales,” are actively accumulating the digital asset.
The analyst noted that Permanent Holder addresses, which have been holding their Bitcoin for more than 3 years, saw an raise of 404,000 BTC, including 40,000 BTC within the U.S. Bitcoin spot market listed funds (ETFs) in the last 30 days.
In contrast to the increased whale activity, Ju observed a relative lack of retail investors, similar to market conditions in mid-2020. This can be interpreted as a positive sign as it indicates that the current price movements are not being driven by speculative froth but rather by strategic accumulation of Bitcoin by institutional investors.
Finally, Ju noticed a decrease sales pressure from long-term Bitcoin holders, or “old whales,” who sold their shares to modern whales between March and June.
The analyst sees the lack of significant selling pressure from seasoned investors as a bullish sign as it suggests a modern generation of institutional players are now shaping the market with a more long-term perspective.
At the time of writing, BTC is struggling to break out of the current price level of $56,670 while limiting its longer time frame losses which stood at 13% last week.
Featured image from DALL-E, chart from TradingView.com
