In the ongoing market turmoil on higher timeframes, Bitcoin (BTC) is at a crucial juncture as a major period of consolidation continues.
Research and analytics firm Material Indicators has been keeping a close eye on the recent weekly candle close/open process and has paid particular attention to it two key factors: the trend line and the 21-day, 21-week and 21-month moving averages (MA) – all of which are currently influencing the shaping of market dynamics.
Uncertainty and possible turning point for Bitcoin
The opening of the weekly candle below the trendline triggered a “subsequent nosedive” that added to concerns. According to the company’s analysis, while the 21-week and 21-month moving averages continue to serve as robust support, the 21-day MA faced a severe seven-day testing period.
Notably, the close correlation of the 21-MA across three different time frames is rare, suggesting the market is at a critical turning point.
Despite the compressed volatility observed over the past few days, the price action observed over the past 24 hours is an example of the market trying to shake off weak hands.
According to Material Indicators, given the complexity of current price action, it is prudent to zoom out and gain a broader perspective. Both Trend Precognition algorithms identified these movements on the four-hour chart, emphasizing the importance of a comprehensive forecast.
Additionally, according to Materials, the order book shows a worrying trend in bid liquidity, with less than $40 million sustaining the price.
Material Indicator order book shows low liquidity below the current price of BTC – Source: Material Indicators.
The lack of significant liquidity below this level is a fundamental concern. However, it also suggests that sentiment may not be enough to bring prices down significantly — at least not yet.
In addition, Material Indicators underscores that the examination of order book liquidity movements over the past month paints a picture of ongoing price volatility with potential upside.
However, the lack of volume raises concerns about the overall health of the market. Despite a $13 million buying wall at $27,900, the channel bottom at $28,300 remains a critical threshold for BTC to continue its current trend. The company claims:
…the bottom of the channel at $28.3k keeps my line in the sand for BTC to extend the trend and I contend that we need to see a weekly candlestick print above the 100 week ma to even consider a bull breakout.
BCT is under renewed pressure given the strengthening US dollar
As Bitcoin enters a new trading week, market participants are closely watching the potential impact of the strengthening US Dollar Index ($DXY) on the world’s leading cryptocurrency.
After According to Yan Alleman, co-founder of blockchain analysis firm Glassnode, recent developments suggest that BTC may come under renewed pressure due to DXY’s bullish momentum.
Alleman emphasizes that renewed strength in $DXY could put downward pressure on bitcoin price. Historically, there has been an inverse correlation between the value of the US dollar and the price of BTC, meaning that when the dollar strengthens, Bitcoin often faces headwinds.
However, option prices suggest bullish sentiment for Bitcoin in the month ahead. Options are financial derivatives that allow traders to speculate on the future price of an underlying asset, in this case Bitcoin.
Options contract pricing suggests upward movement is imminent. This is consistent with technical analysis pointing to upside potential for Bitcoin.
Analyzing the potential price moves, Alleman notes that it would take nearly twice as much selling pressure to push Bitcoin to the low $28,000 level than the buying pressure it would take to surpass $30,000 .
This observation suggests that there may be greater support and buying interest at higher price levels, making a sustained decline less likely.
BTC price has been moving sideways on the 1-day chart. Source: BTCUSDT on TradingView.com
At the time of writing, Bitcoin (BTC) is trading at $29,500, up marginally 0.4% over the past 24 hours.
Selected image from iStock, chart from TradingView.com
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