The price of Bitcoin is currently at a critical position, around $29000. If the weekly closing price of the candlestick can be maintained above $30616, it will provide new impetus for the bull market rebound in 2023
The price of Bitcoin is currently at a critical position, around $29000. If the weekly closing price of the candlestick can be maintained above $30616, it will provide new impetus for the bull market rebound in 2023. However, if there is a rejection near $28000, it will create a lower high point, which may increase the likelihood of a trend reversal.
After a sustained increase in Bitcoin (BTC) prices in 2023, it reached a weekly low on August 28th. Since the beginning of this year, the return on Bitcoin has reached 91.50%. Although some investors are skeptical of the upward trend, others remain optimistic. The current controversy in the market has left only a few people uncertain and waiting for more confirmation.
The key point of Bitcoin price lies in its trend situation
Last year, Bitcoin prices experienced three significantly higher highs and two higher lows. As mentioned earlier, this upward trend brought investors a return of 91.50%, but the depletion of momentum and profit taking led to a nearly 21% drop in Bitcoin prices. This adjustment has formed a lower low point on the weekly chart, which is $25386, compared to the previous weekly low of $25941, which is the first condition for the trend to reverse.
The second condition for a comprehensive downward trend is to form a lower high point. In this case, bears need to ensure that the weekly candlestick closing price of Bitcoin does not exceed the last critical weekly high of $30616. If the short selling is successful, all conditions necessary to initiate a downward trend will be met.
Last week, most investors expected Bitcoin prices to further decline. However, the recent rise in Bitcoin prices has pushed the trading price up to around $29000, reaching a two-month high, reducing the possibility of a downward trend as more investors still feel uncertain about the future trend.
What are the future trends of Bitcoin?
The weekly relative strength index (RSI) has rebounded, indicating a balance between bulls and bears, who have the same opportunity to regain control of the market. This sign suggests that the market is looking for the next direction.
In addition, the Great Oscillator (AO) is very close to flipping to the zero mean level. In Bitcoin's past history, AO successfully flipped to zero level in early 2023, when Bitcoin began a bull market rebound. If history repeats itself, RSI has shown signs of supporting this trend.
Positive conclusions can be drawn from historical data on whether Bitcoin prices will successfully initiate an upward trend. The historical monthly returns on Bitcoin prices over the past 12 years indicate that November was the month with the highest returns, followed by April and October.
In addition, the fourth quarter was the quarter with the highest return rate, with a return rate of 93.38%.
Therefore, based on historical data, the possibility of Bitcoin prices continuing to rise and maintaining the upward trend in 2023 is very high.
On chain indicators indicate that the trend may have been depleted
Although there may still be upward momentum in terms of technology, on chain indicators reveal potential signs of correction. Based on the 7-day and 30-day market value to realized value (MVRV) indicators, the recent rise in Bitcoin prices may have pushed these indicators into danger zones.
The MVRV indicator is used to determine the average profit or loss situation of investors who have purchased Bitcoin in the past week and month. Currently, the 7-day MVRV is 3.53%, which means that out of all investors who have purchased Bitcoin in the past week, 3.53% are in a profitable state. Similarly, the 30 day MVRV report shows that nearly 6% of holders are in a profitable state.
From historical data, both the 7-day and 30-day MVRV indicators are located in so-called "hazardous areas". These key areas indicate that investors may have already made profits, which may trigger market adjustments, although such adjustments may be short-term.
If history repeats itself, this adjustment may further help bears meet the second condition of trend reversal and lead to lower highs.
In addition, since reaching a peak of 1.23 million on September 15th, Bitcoin's daily active addresses have started to decline. In addition to the irregular increase in on chain transaction volume, from the perspective of on chain data, the prospects of Bitcoin seem to be somewhat bleak.
According to the observation of the weekly chart, it can be observed that when Bitcoin prices hit higher highs in April and July, RSI did not follow the rise, forming a bearish divergence. This technological form usually leads to a decline in the underlying asset. For Bitcoin, this led to a 20% pullback and a lower low in September. But if Bitcoin does indeed generate a third higher high and RSI continues to generate lower highs, it will confirm the pattern of triple bearish divergence.
Although this top formation pattern is common in the cryptocurrency industry, it typically triggers two behaviors: first, clearing early short positions, and then attracting more long investors to position themselves in the rising market.
Therefore, although the price of Bitcoin has fallen, which has led to the liquidation of a large number of short positions, greedy long positions may also be liquidated now. This situation may create a perfect condition to initiate a downward trend.
In a downward trend, Bitcoin prices may find support at the $25000 level. If this situation occurs, it may trigger volatility and adjust the price to $19300.
However, if long positions succeed in creating higher highs and continue to be correlated with ETF speculation, then Bitcoin prices may once again reach the level of $31777. If this level reverses to become a support level, then Bitcoin prices may continue to rise to $36294.
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