Despite cautious weekly close, BTC maintains larger bullish structure (Bitcoin price analysis)
After another crazy week of sell-offs and panic selling, BTC held an end-of-day rally ahead of the weekly close. It closed slightly below the 21-week EMA, but managed to maintain a larger technical structure by staying above $ 40,000 and $ 41.3,000.
$ 40.7,000 was a very key level as it is the highest low, which has already been tested twice and managed to hold up. So far, the pullback from $ 52.9,000 to $ 39.5,000 has followed a 3 wave drop, suggesting this is a corrective wave, fairly common after a big rally.
Elliott Wave suggests Wave 2 is almost over
So far, BTC appears to have hit a higher low at $ 40.7,000. The next step to confirm the completion of Wave 2 will be to peak above $ 45.1,000, last week’s intra-week highs. This is critical for short-term price action as technical analysts wait to see if Wave 3 forms on the upside.
Elliott Wave suggests that the move from the lows of $ 29.2,000 to $ 52.9,000 could be the start of Wave 1 on the upside. The recent pullback from $ 52.9,000 to $ 39.5,000 could be the corrective wave for Wave 2. Whenever bottom is confirmed, BTC should initiate Wave 3, usually the biggest upside momentum.
The larger structure continues to hold up as $ 40,000 has been established as a very good level of technical and chain support. During last week’s sell-offs, stunts of forced sells pushed the intra-day price below $ 40,000, with BTC managing to maintain support on a daily close with higher volume. This suggests that bigger buyers stepped in as BTC tested major support at $ 40,000.
3-day and weekly chart still bullish
Despite a slight weekly close below the 21-week EMA, the 3-day and weekly charts remain bullish when looking at the overall trend and structure. BTC tested the 21 week MA at $ 41.7,000 and maintained support on a weekly close basis.
The 3 day chart continues to show strength, especially with the bullish cross where the 21 day MA broke through the 50 day MA. This is a medium to long term signal of further upside, often leading to multiple backtests of 21-day MA and 50-day MA support on the 3-day chart, before a big rally. does not start.
Recent volatility has prompted BTC to retest the key 50-day MA on the 3-day chart at $ 42.2,000. BTC closed 3 days below this key level, but managed to retreat the next few 3-day candles, a short-term positive signal. Recent price action on the 3-day chart is very similar to October 2013 conditions. Stay tuned for an in-depth analysis of similar technical and on-chain conditions on why the BTC bull market has a strong rise to come.
On-chain metrics remain strong
The short-term charts may look bearish, but the underlying strength of the fundamental and the chain continues to increase, strongly suggesting that the disconnect between price and fundamental will likely close soon. Last week’s selling pressure came from massive sell-offs, emptying the derivatives market, again causing panic in younger coins.
As usual, large investors and entities holding older coins came in and picked up BTC in the lower $ 40,000 range. Even with a 25% drop from highs of $ 52.9k, spot foreign exchange reserves continue to decline. Since the highs of September 7, 2021, spot foreign exchange reserves have fallen by 11,723 BTC, a strong indicator of accumulation. Spot foreign exchange reserves remain at their lowest for several years as investors continue to remove BTC from the exchanges.
BTC Miners sold 2,968 BTC over the past week as the market fell amid sellouts and panic sales. This may sound like a large amount of BTC, but keep in mind that this is almost 3,000 BTC out of total miners’ reserves of 1,850,000. So far this year, miners remain in net build-up even with a 55% crash, countless FUDs, and multiple wind-up events. Miners continue to hold BTC, showing no major signs of selling pressure.
The average age of coins by CryptoQuant continues to increase for the week, indicating that long-term holders continue to accumulate and hold while younger coins sell out. The mid currency shows no signs of a bear market, as previous transitions from bull market peaks to bear markets have caused the metric to continue falling.
The May 2021 crash did not result in a significant distribution from long-term holders. Instead, they returned to accumulating throughout the multi-month consolidation between $ 30,000 and $ 40,000, suggesting that this is a mid-cycle pullback. The overall on-chain data trend continues to suggest that BTC is not in a bear market, and continued supply depletion is likely to result in significantly higher prices in the coming months.
Macroeconomic conditions remain bullish
The SPX managed to print a big hammer candle on the weekly chart last week, indicating that risk appetite could return to the market. While sentiment remains bearish as many call for a cyclical peak in the markets, it is important to consider that there are trillions of liquidity left on the sidelines, that the Fed’s balance sheet continues to hit record highs and that the rates remain at zero.
Major market highs occur when majority sentiment turns bullish, funds are fully deployed, and rates tend to rise. None of this is happening, suggesting that risk assets are still on the rise, potentially until rates start to rise, perhaps in late 2022 or later. As fiat currencies lose value and purchasing power, investors will continue to seek out stores of value, likely making stocks, real estate and Bitcoin desirable assets to own in the current macroeconomic environment.
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