Home » Bitcoin price broke out this week, but has the trend changed?

Bitcoin price broke out this week, but has the trend changed?

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Welcome readers, thanks for subscribing! The Altcoin Roundup newsletter is currently written by Cointelegraph’s resident newsletter writer. big smokeyIn the coming weeks, this newsletter will be renamed to Crypto Market Musings. This is a weekly newsletter that provides forward-looking analysis and tracks emerging trends in the crypto market.

The publication date of the newsletter remains unchanged and will continue to feature content focused on a more macro-level technical and fundamental analysis of cryptocurrencies to identify key shifts in investor sentiment and market structure. . Enjoy!

How long does it take?

This week, Bitcoin’s (Bitcoin)the price is feel better, soared to $21,000 on Oct. 26. This has led to a handful of traders declaring that a bottom may have been reached or that BTC is entering the next phase of a technical structure like a Wyckoff, a range break, or some kind of support resistance flip. . .

Before we get all the bulls and open 10x longs, let’s go back to our earlier analysis to see if there has been any change in Bitcoin’s market structure, and whether the recent bullish momentum has signaled a change in the broader trend. Let’s see if there are

When last update Bitcoin went public on September 30 at around $19,600, staying within the price range of the last 136 days. At the time, I was identifying bullish divergences with the Weekly Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD). There were also some potential ‘bottoming out’ signals coming from multiple on-chain indicators, which were at multi-year lows.

Let’s see how things are now.

bollinger bands are tight

The Bollinger Bands on the daily timeframe continue to contract, and this week’s surge to $21,000 is widening or volatility spike What most traders expected. Naturally, after breaking out from the upper arm, price has returned to test the midline/midband (20MA) as support.

Despite the strength of the move, the price remains below the 200-MA (black line) and it is unclear at this time if the 20-MA will act as support for Bitcoin’s price.

BTC/USD daily chart with Bollinger Bands.Source: Trading View

After bouncing back to an almost all-time low of 25.7, the weekly RSI continues its upward trend, continuing the bullish divergence identified in our previous analysis. A similar trend holds for BTC’s weekly MACD.

On the same chart, we can see that the latest weekly candle is about to make a weekly high. If the candlestick breaks above the last 5-week highs and the price continues over the next few weeks, above $22,800 on a daily or weekly basis, this could be a trend reversal.

BTC/USD weekly chart.Source: Trading View

On the daily timeframe, BTC’s Guppy Multiple Moving Average (GMMA or Super Guppy) indicator is frowned upon. The short-term moving averages are compressing and converging with the long-term moving averages. This usually signals an imminent directional move, or possibly a macrotrend reversal, underway.

BTC/USD daily chart.Source: Trading View

In recent weeks, Bitcoin’s “record low volatilityIf Bollinger Bands, GMMA, or BVOLs are used, a tightening of the price range would suggest an expansion, but which direction it will go remains a mystery.

Bitcoin has been trading between $18,600 and $24,500 for 36 days, and from a technical perspective, the price remains roughly in the middle of the range. A move to $21,000 will neither set a significant daily high nor escape the current range. This is essentially flat.

The price is currently above the 20-day moving average, but the 20-day moving average has not yet crossed the 50-day moving average.

BTC/USD daily chart.Source: Trading View

A more convincing development would include Bitcoin attempting to break out of the current range block and test the 200-MA at $24,800, eventually reversing and supporting the moving averages.

Further expansion into the $29,000-$35,000 range will give confidence to bulls looking for a clearer sign of a trend reversal. More integration anchored by resistance.

Related: Why Is The Crypto Market Rising Today?

Bitcoin’s on-chain data says it accumulates

Similar to BTC’s spot price, the MVRV Z-score has also bounced in the zone of -0.194 to -0.023 over the past three months. The on-chain indicator reflects the ratio of BTC market cap to realized market cap (the amount people paid for BTC compared to today’s value).

Bitcoin’s 3-month MVRV Z-score.Source: Glassnode

In short, when Bitcoin’s market value is measurably higher than its actual value, the metric falls into the red area, indicating market top potential. When the metric enters the green zone, Bitcoin’s current value is below its realized price, indicating that the market may be nearing a bottom.

Bitcoin MVRV Z-score.Source: Glassnode

According to the MVRV Z-score chart, the current -0.06 MVRV Z-score is in the same range as previous multi-year lows and cycle bottoms when compared to Bitcoin price.

reserve risk

The Bitcoin Reserve Risk Index shows how ‘confident’ investors compare to Bitcoin’s market price.

When investor confidence is high and BTC price is low, the risk versus reward of buying and holding BTC or the attractiveness of Bitcoin falls into the green area.

During periods of low investor confidence and high prices, reserve risk moves to the red area. Historical data suggests that building a Bitcoin position when reserve risk enters the green zone is a good time to establish a position.

Bitcoin 6 month reserve risk.Source: Glassnode

Now, over the past six months, we see the indicator carve out what investors might describe as a trough. Crossing the threshold and entering the green zone indicates the beginning of recovery.

Bitcoin reserve risk.Source: Glassnode

I’m looking forward to

Multiple Data Points Seem To Suggest Bitcoin Price Is Undervalued And Still In The Process Of Bottoming Out, But Confirms The Real Market Bottom Is In There is nothing to do.

This week, and months ago, several bitcoin mining businesses publicly announced the need for debt restructuring, possible failure to repay their debts, and even threatened bankruptcy.

Most of the publicly listed miners are Sell ​​most of the mined BTC Since June and on recent headlines calculate north and Core Scientific suggest that Bitcoin’s price is still in jeopardy due to industrial miner solvency problems.

Data from Glassnode show The total size of the miner balance around 78,400 BTC is “held by the miners we label (accounting for 96% of the current hashrate)”.

In the event of “income stress,” miners could be forced to liquidate tranches of these reserves on the open market, according to Glassnode, and the ripple effect on Bitcoin’s price could be the next catalyst for selling. Could be – down to new year-to-date lows.

This newsletter is Humble Pope Substack He is also the author of Cointelegraph’s resident newsletter. Every Friday, Big Smokey writes market insights, trend how-tos, analysis, and early research on potential emerging trends within the crypto markets.