Key Points:
- Thin $40M bid pool supports BTC price.
- Strengthening US Dollar’s effect on BTC.
- Options pricing hints at potential bullish move.
Amid the ongoing turbulence in the market’s broader timeframes, Bitcoin (BTC) finds itself at a pivotal crossroads, characterized by a prolonged consolidation phase.
The recent weekly candle’s close/open has been vigilantly tracked by research and analysis entity Material Indicators, with specific focus on two vital elements: the trend line and the 21-day, 21-week, and 21-month moving averages (MA), all of which are currently exerting substantial influence over market dynamics.
Bitcoin’s Uncertain Path and Potential Turning Point
The initiation of the weekly candle below the trend line has triggered a subsequent downward spiral, intensifying concerns. While the 21-week and 21-month moving averages persist as formidable supports, the 21-day MA has endured a rigorous week-long test, according to the firm’s analysis.
Notably, the remarkable alignment of the 21-MA across three distinct timeframes is an unusual occurrence, signifying a critical juncture in the market’s trajectory.
Despite the recent reduction in volatility, the price action witnessed over the last 24 hours highlights the market’s endeavor to purge weaker positions.
According to Material Indicators, given the intricate nature of the current price behavior, it’s advisable to adopt a broader perspective by zooming out. The Trend Precognition algorithms have identified these movements on the four-hour chart, underscoring the importance of adopting a comprehensive view.
Additionally, Material Indicators sheds light on an unsettling trend in bid liquidity within the order book, where a mere sum of less than $40 million is supporting the price. The lack of substantial liquidity below this threshold raises fundamental concerns. However, it also suggests that the sentiment might not be sufficiently bearish to drive prices significantly lower—at least not yet.
Furthermore, Material Indicators observes that the scrutiny of liquidity shifts within the order book over the past month portrays a scenario of sustained price volatility with a possible upward inclination.
Nevertheless, the dearth of volume raises questions about the market’s overall health. Despite a buy wall of $13 million at $27,900, the critical threshold for BTC to sustain its current trend remains at the channel’s bottom of $28,300. The firm asserts:
“The bottom of the channel at $28.3k remains my line in the sand for BTC to extend the trend, and I maintain that we must see weekly candles printing above the 100-Week MA to even consider a bull breakout.”
BTC Confronts Renewed Pressure Amid Resilient US Dollar
As Bitcoin enters a new trading week, market participants are closely monitoring the potential influence of the strengthening US Dollar Index ($DXY) on the world’s foremost cryptocurrency.
According to Yan Alleman, co-founder of blockchain analytics firm Glassnode, recent developments hint at potential renewed pressure on BTC due to the upward momentum of the $DXY.
Alleman underscores that the reinvigorated strength of $DXY could exert downward pressure on Bitcoin’s price. Historically, an inverse correlation between the US Dollar’s value and BTC’s price has existed, implying that Bitcoin often faces resistance when the dollar gains strength.
Nonetheless, options pricing reveals an optimistic outlook for Bitcoin in the upcoming month. Options serve as financial derivatives that enable traders to speculate on the future price of an underlying asset—in this context, Bitcoin.
The valuation of options contracts points to an anticipation of a forthcoming bullish move. This aligns with the technical analysis that suggests potential upside for Bitcoin.
Assessing potential price movements, Alleman observes that pushing Bitcoin down to the lower $28,000 range would necessitate nearly twice the selling pressure compared to the buying pressure required to surpass the $30,000 level.
This observation suggests the existence of substantial support and buying interest at higher price levels, rendering a sustained drop less probable.
As of the current writing, Bitcoin (BTC) is trading at $29,500, reflecting a marginal 0.4% uptick over the preceding 24-hour period.
