Is Bitcoin about to fall lower or is the worst to come after it crashes below $39,000? (BTC price analysis)

Bitcoin's retracement has extended due to increased selling pressure, pushing the price towards a crucial and crucial support area that includes the critical 200-day moving average and the middle boundary of the ascending channel.

The price movement within this significant range is of utmost importance in shaping the future development of Bitcoin.

Technical analysis

By Shayan

Bitcoin Price Analysis: The Daily Chart

When analyzing the daily chart, it is clear that Bitcoin's recent correction has extended, resulting in a significant decline. However, the downward momentum of the retracement was temporarily halted when a crucial support area was reached, marked by the middle boundary of the ascending channel and the crucial 200-day moving average at $39,000, providing solid support to buyers.

Given the strength of this support area and the potential presence of significant demand, it seems likely that price will find support for the time being, leading to a period of sideways consolidation. In this scenario, the recent downturn will serve as a necessary corrective phase and lay the foundation for a renewed uptrend.

Still, an unforeseen break below the 200-day moving average could trigger a cascading effect and bring renewed fear to the market. However, Bitcoin's price action within this crucial zone remains crucial in predicting the cryptocurrency's medium-term prospects.

Source: TradingView

The 4 hour chart

Looking at the 4-hour chart shows that the rejection of the $48,000 resistance zone prompted the price to break the lower boundary of the ascending flag, signaling the prevailing bearish sentiment in the market. After a successful retreat to the broken level, the price initiated another significant downward trend, suggesting a distribution behavior among market participants, especially smart money.

Despite these bearish signals, Bitcoin has reached a critical and significant support area that includes the static support at $39,000 and coincides with the significant 0.5 Fibonacci retracement level, acting as a formidable barrier against any downward attempts by sellers.

Consequently, the most likely short-term scenario is that buying pressure increases again, supporting the price and entering a bullish retracement. However, a sudden break below this crucial support will pave the way for the continuation of the recent decline towards the 61.8% Fibonacci retracement level at $35.1K.

Source: TradingView

On-chain analysis

By Shayan

The realized cap, measured by UTXO age bands, provides valuable insight into the distribution of realized capitalization based on the age of unspent transaction results (UTXOs). Each individual band indicates the portion of the realized cap associated with UTXOs last used within a specific time period. Essentially, upswings in these age groups indicate periods characterized by HODLing and accumulation in the Bitcoin market, while downturns indicate increased sales and distribution activity.

Currently, Bitcoin has entered a correction phase after a notable uptrend due to selling pressure coming from spot ETFs and the recent impulsive price increase.

Despite the ongoing correction, an analysis of the percentage of volume acquired in less than three months shows that Bitcoin has not yet reached its annual high. Accordingly, it seems premature for the market-leading whales to complete their uptrend. Still, there is a high probability that the price will witness another increase after a 1-2 month adjustment period with the aim of marking a new ATH.

Source: CryptoQuant
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Cryptocurrency charts from TradingView.

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