Bitcoin bulls sally past $26.2k – Time for a rally?
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
- Bitcoin’s market structure was bearish, but a move above $27.4k could change this.
- Traders must be cautious around the $28k mark due to the possibility of a liquidity hunt.
Bitcoin’s [BTC] correlation with the S&P 500 turned negative over May. This meant that the index has an overall bullish outlook, but Bitcoin has trended in the opposite direction in recent weeks. The increasing hostility from regulatory bodies in the United States has played a part in BTC’s misfortunes on the price chart.
Read Bitcoin’s [BTC] Price Prediction 2023-24
There was an argument to be made that Bitcoin showed some signs of recovery. Yet, an analysis of the price action showed that the bias remained in favor of the sellers. On the other hand, if Bitcoin climbs to $28k, it could signal an uptrend.
Can the bulls drive Bitcoin past $27.4k next?
The market structure of Bitcoin on the daily timeframe was bearish. The structure shifted on 21 April when BTC dipped below a recent higher low. Since then, the price has trended lower on the chart.
Moreover, the trading volume has been extremely low from April onward, compared to the volume seen in February and March. This was reflected on the OBV as well, which only went slightly lower in May in contrast to the rapid gains it posted in mid-March.
The Fibonacci levels based on the recent leg down show that Bitcoin was likely headed toward $24.8k. The 61.8% extension level at $23.3k was also a target it presented. The price action showed that the $24.2k-$24.4k region could serve as strong support. Beneath that, the $22.4k and $21.5k levels were important.
To signal a bullish shift in the structure, Bitcoin prices must rise back above the recent lower high at $27.4k. Yet, an uptrend would not be established there, as BTC would need to form a higher low and continue higher. Cautious investors can wait for this turn of events before looking to buy.
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Falling BTC supply on exchanges need not indicate an accumulation phase
The dormant circulation saw a massive spike on 7 May, but since then, the surges have not been out of the ordinary. The most recent one on 15 June saw BTC drop to $24.8k. The active address metric has also picked up over the past two weeks.
The supply on exchanges was dwindling in response to users moving funds to self-custody out of fear. The exchange flow balance also showed the past few days have seen more outflows than inflows.