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Analysis

Bitcoin shows short-term promise: Does this herald a recovery?

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As Bitcoin bounced from $25.6k to reach $26.4k, the Open Interest did not show a noticeable uptrend and indicated that bullish conviction was not present in the futures market.
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Bitcoin shows short-term promise: Does this herald a recovery?
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Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.

  • Bitcoin fell to a higher timeframe demand zone and witnessed a minor bounce in recent hours.
  • Bulls lacked strength in the market in the near term.

Bitcoin [BTC] saw a rough fall on the price charts last week to reach $25.2k. A recent report explored the implications of BTC flows into and out of exchanges and noted that a widespread sell-off might not follow.

Read Bitcoin’s [BTC] Price Prediction 2023-24

At the time of writing, Bitcoin was trading just above a higher timeframe area of interest. While selling pressure saw a notable decline recently, it did not signal a rally was imminent.

The price action of Bitcoin in the past few days showed a bounce in prices was possible

Bitcoin [BTC] shows short-term bullish promise- is this the beginning of a recovery?

Source: BTC/USDT on TradingView

The trend of Bitcoin was firmly bearish on the 4-hour chart. But in the past 24 hours, this outlook began to change. The most recent lower high was at $26.6k, marked in orange. BTC bulls managed to close a 4-hour trading session above this level and achieved a bullish market structure break in this timeframe.

A look at the daily chart showed things were still dire for the buyers. However, the $25.6k zone was highlighted in cyan to indicate the presence of a bullish order block where the mid-June rally began.

Therefore, a retest of this zone was ideal for lower-timeframe traders looking to go long. The recent break in structure suggested a move upward was likely. The RSI climbed back above neutral 50, but the OBV saw only a small bounce in the past 24 hours.

The Fibonacci retracement levels (yellow) were plotted based on the free-fall that BTC saw last week. It showed that the $28.3k and $29.1k levels could be tested as resistance. The $28.5k level was significant as well.

The negative funding rates showed market bias leaned bearish

Bitcoin [BTC] shows short-term bullish promise- is this the beginning of a recovery?

Source: Coinalyze

When Bitcoin bounced from $25.6k to reach $26.4k, the Open Interest did not show a noticeable uptrend.

Is your portfolio green? Check the Bitcoin Profit Calculator

Instead, when BTC reached the lower high at $26.6k and dipped to $26.2k, the OI saw a sharp fall, which suggested longs from lower were taking profit at the short-term area of interest.

This signaled a lack of bullish conviction from market participants in the past 24 hours that a move toward $28k could materialize. The spot CVD also jumped higher alongside prices, which showed some demand was present.

 

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Akashnath Sumukar works as a Senior Journalist at AMBCrypto. Based in Chennai, India, he has been an avid follower of the cryptocurrency market since Bitcoin’s boom and bust cycle of 2017. A graduate in Chemical Engineering, he is an expert in technical analysis. In fact, Akashnath has a particular interest in reading price charts and predicting how an asset will move over the short and long term. A self-taught trader and as someone who holds cryptos himself, he is always on the lookout for the next opportunity he can possibly capitalize on, while also educating his audience.
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