Bitcoin price is raising questions among analysts and investors for failing to move despite holding dearly to support at $30,000 even as bears draw the line at $32,000 resistance.
The largest cryptocurrency has according to on-chain insights from CryptoQuant “been lodged within a narrow corridor for the past three months.” The on-chain analytics platform claims that the answer lies in the protocol’s fundamental factors such as supply and miner activity.
While we will explore Bitcoin’s fundamental position in a bit, BTC is still feeling the pinch of an aggressive bear camp – down 1% to $30,005. Trading volume is up to $14 billion with its market capitalization holding at $582 billion.
The largest altcoin appears to be following in BTC’s footsteps, down 1.6% to $1,898. As discussed in the previous analysis, Ethereum price must reclaim $1,900 support to keep the resumption of the uptrend above $2,000 intact.
What’s Next if Bitcoin Price Loses $30,000 Support?
The Bitcoin price consolidation in a narrow rectangular pattern, as shown on the daily chart reveals that the tug of war between bulls and bear is close to its tensile limit. This implies that investors should prepare for two conflicting outcomes.
A break and hold the $30,000 immediate support could validate declines to $28,000 and $25,000 in that order.
Short positions below $30,000 may intensify the selling pressure, thus creating instability at important but minor support areas as highlighted by the 200-day Exponential Moving Average (EMA) (in purple) and the subsequent buyer congestion at $29,000.
Adding credibility to the bearish outlook is a confirmed sell signal from the Moving Average Convergence Divergence (MACD) indicator.
Despite the sell signal, which manifested with the MACD line in blue crossing above the signal line in red, shorts traders should not underestimate the short-term support at the 200-day EMA as it may be the liquidity Bitcoin price sweeps for a larger breakout above $32,000.
The other outcome entails a breakout above the rectangle pattern, in turn, with Bitcoin price equipped with the right conditions for a rally, including improved investor sentiment, a rising trading volume, and expanding liquidity.
Some of the most crucial levels to watch going forward include the support at $30,000 and another at the 200-day EMA. On the upside, a break above the rectangle and resistance at $32,000 could mark the beginning of a rally to $35,000 and $38,000.
Why Bitcoin Is Failing To Move – CryptoQuant
On-chain data as presented by analytics platform CryptoQuant attempts to explain what is holding Bitcoin price from breaking out of the narrow consolidation. Researchers at the firm found that “starting from April this year, the STH (Short-Term Holders) supply began to decrease.” This cohort continues to offload BTC wallets, thus applying more pressure on the market.
According to the Miner Exchange Inflow Realized Price, “miners are actively selling their Bitcoin reserves.” The researchers believe this is not a unique occurrence as it mimics miners’ behavior ahead of the halving – expected in April 2024.
Miners often sell months before halving to acquire equipment in a bid to increase their efficiency with mining activities becoming increasingly difficult with each four-year cycle.
Another factor that might be hindering a Bitcoin price breakout could be attributed to the Volatility Index. After considering the inflow and outflow of money into and out of BTC markets, the volatility index shows “a significant decrease in market activity” since April 2023.
4/ All these factors together form the current picture of the #Bitcoin market, where the price appears to be “stuck” in a narrow range. pic.twitter.com/OghS8zoxt8
— CryptoQuant.com (@cryptoquant_com) July 18, 2023
Some if not all not all these factors must change dynamically to support a sustainable breakout in Bitcoin price to $35,000 and $38,000, respectively. Otherwise, declines to $28,000, and $25,000 could be in the offing.
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The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
