The $19K demand area has acted as an important support level for bitcoin price over the past few weeks, resulting in a short-term rally towards the 50-day moving average of around $22K.
During the recent rally, the price failed to break out of the 50-day EMA, which is the most important resistance level in bitcoin’s path towards the $30K price channel.
On the other hand, as the following chart shows, the price broke the middle range of a long-term descending channel, successfully formed a pullback to the broken trend line, and started a rally. If bitcoin breaks above its 50-day moving average (around $22.5K), a move towards the 100-day moving average (currently $28K) and the upper boundary of the channel would be possible. Furthermore, the RSI indicator largely hints at the relative balance between bulls and bears as it is near 50.
4 hour chart
After experiencing a prolonged bearish trend, the price has entered a medium-term consolidation phase, a well-known continuation pattern known as a ‘wedge’. However, the lower trend line and the $19K key support level recently supported the price, resulting in a move towards the upper boundary.
That said, the market failed to continue higher as the price rejected the upper trend line of the wedge and is headed for a correction. If Bitcoin successfully breaks the upward wedge, its next destination will be the crucial $30K resistance level. Conversely, if the trendline rejects the price, a fresh short-term shakeout towards the $18K mark would be possible.
Considering the lack of demand in the crypto market and the current bearish sentiment, a new bearish waterfall seems like a likely scenario for the cryptocurrency.
As stated in our previous analysis, miners have recently entered the capitulation phase and are distributing some of their assets. Bitcoin mining, on the other hand, is not as profitable as the price has dropped by about 74% from its all-time high.
Bitcoin difficulty varies based on the latest movements of miners’ behavior and hash rate, and adjusts how many miners currently have their machines plugged in. Generally, when they are more active miners, the difficulty adjustment makes it harder for them to mine and ensure a block. that block production remains relatively constant. Relying on Cryptoquant data, the latest adjustment has reduced the difficulty to 5.01 percent. This is the most significant single downside decrease in bitcoin’s difficulty since July 3, 2021. Additionally, it is the third consecutive negative, making it the longest such streak in a little over a year.
ground level: Historically, the capitulation of miners has put an end to the bear market. Therefore, bitcoin could soon reach its long term bottom and start a new uptrend towards higher price levels.
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Cryptocurrency charts by TradingView.