Bitcoin [BTC]: Here are some signals that are pointing to a strong possibility of a recovery

Bitcoin price seems to have found its stable base at $29,100 after a recent flash crash below. This quick recovery and retest will be a testament to the power of the bulls and determine the next course of action for BTC.

Bitcoin price to make temporary profits

Bitcoin price created a bearish continuation pattern known as the bear flag between November 2021 and April 2022. After a brief consolidation in late April, BTC broke out of setup and triggered a massive sell-off.

The pattern contains a massive downturn known as the “flagpole” followed by a phase of consolidation known as the “flag”. A breakout of this rollup often results in price continuing its descent, which is why the setup is called a continuation pattern.

This technical formation predicts a 46% downturn determined by adding the height of the flagpole to the breakout point. On April 22, BTC broke the flag’s lower trendline at $40,032 and forecast a target of $21,584.

So far, post-FOMC volatility coupled with the LUNA-UST debacle has roiled the market and led to a violent crash. As a result, BTC fell to $25,333, taking altcoins with it. However, the bitcoin price recovery seems to be going well as it is back above the $29,100 support level.

If bulls manage to retest successfully, it will show that another uptrend is likely. In such a case, investors can expect a rally to $35,100. This uptrend would represent a 17% overall gain and is likely where the uptrend is limited.

BTC Perpetual Futures | Source: Trade View

The uncertainty in the minds of retail investors is further removed by the recent Luna Foundation Guard (LFG) tweet. The announcement states that LFG sold 80,081 BTC from its reserve, which contained 80,394 BTC.

1/ As of Saturday May 7th, 2022, the Luna Foundation Guard held a reserve consisting of the following assets:
80,394$BTC
39,914$BNB
26,281,671 USDT
$23,555,590USDC
$1,973,554 AVAX
$697,344
1,691,261 $LUNA

— LFG | Luna Foundation Guard (@LFG_org) May 16, 2022

This news suggests that another selloff looks unlikely, which could prompt buyers to start bidding.

The tweet goes on to say:

“The foundation seeks to use its remaining assets to compensate the remaining users of $UST, the smallest holders first. We are still discussing different distribution methods, updates coming soon.”

This Bitcoin price outlook is supported by the supply on the stock market chart. This index tracks the number of BTC held on exchanges, which could be interpreted as potential selling pressure. In the event of a sell-off, investors would not think twice and could panic sell, triggering a cascade of sell orders that could amplify the downturn.

However, for Bitcoin, the number of tokens held on centralized units has fallen by 50,000 BTC, indicating an effective decrease in potential selling pressure. From a technical point of view, this development is consistent with the bullish outlook

Therefore, investors can expect BTC to recover in the near future.

Offer on exchanges | Source: Santiment

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