Bitcoin‘s price has experienced a significant rebound of approximately 18.50% after plummeting to a six-month low of $49,755. However, a combination of technical and on-chain indicators suggests that the cryptocurrency might face further corrections in the coming weeks. Bitcoin’s current correction cycle is also marked by a decrease in the percentage of profits held by long-term investors, calculated on a 30-day moving average.
What’s Happening on the Bitcoin Front?
As of August 16, around 83% of Bitcoin holders were in a profitable position, a drop from 96% in March. A high percentage of profitable Bitcoin holdings often signals FOMO, which typically precedes or coincides with price corrections. If long-term holders decide to take profits based on this on-chain signal, Bitcoin’s price may experience pullbacks in the near future.
Bitcoin’s ongoing consolidation is forming a rising triangle pattern. This technical setup, emerging after a strong downtrend, may indicate a reversal or a weakening of downward momentum. However, if the price breaks below the rising trendline instead of above the resistance, the downtrend might continue, signaling that sellers have regained control.
Details on the Subject
Rising triangles are typically viewed as bullish reversal patterns during a downtrend. Therefore, a decisive close above Bitcoin’s 50-4H EMA could lead to a move toward the upper trendline of the triangle, at around $59,240. A successful close above this upper trendline would confirm a breakout scenario, potentially driving the price toward an upward target of approximately $70,000.
The bullish outlook is consistent with the analysis of Charles Edwards, founder of Capriole Investments. Edwards suggests that Bitcoin’s price is lagging behind gold, which has already broken out from a similar consolidation trend. He predicts that Bitcoin might follow gold’s upward movement.
Key Inferences for Investors
Investors can derive valuable insights from the current Bitcoin market conditions:
- Monitor on-chain signals for potential profit-taking by long-term holders.
- Watch for a decisive close above the 50-4H EMA to anticipate bullish trends.
- Observe the rising triangle pattern to gauge potential reversal or continuation.
- Compare Bitcoin’s price movements with gold for predictive insights.
In conclusion, while Bitcoin has shown signs of recovery, various technical and on-chain indicators suggest potential volatility ahead. Investors should remain vigilant and informed to navigate the market effectively.