Bitcoin price is falling inside a clear bearish descending channel. The cryptocurrency was rejected twice by the upper trendline and is now consolidating below the mid-trendline of the channel and the crucial support level of $20K.
The market usually enters a correction/consolidation phase after experiencing an expansion move. Currently, the price has declined heavily and is likely to enter a range phase in the near term. The $20K level is the most essential and decisive support area for BTC as it is the all-time high of the previous cycle, and the cryptocurrency has never fallen below its previous ATH before.
On the other hand, the blue trendline is acting as a medium-term support for the price of the cryptocurrency and has recently protected it from further downside. However, the channel’s mid-trendline and the 50-day moving average are the primary resistances of the price.
4 hour chart
Bitcoin is also falling inside a bearish descending channel on the 4-hours time frame. The upper trendline is rejecting the price several times. On the other hand, the lower boundary of the channel, which has supported BTC over the past few weeks, has provided a solid foundation for the recent rally.
Currently, the price has reached the mid-trendline of the channel, which, along with the upper trendline of the channel, is the main hurdle for bitcoin on the 4-hours time frame. Either the price will break this level and rebound to the upper limit, or it will be rejected and attempts will be made to break the lower trendline and the $18K important support.
Examining the overall sentiment of the market participants helps in analyzing the ongoing trends. When the big players reach the ‘distribution phase’, start selling their assets and realize their profits, a bullish cycle usually ends.
Meanwhile, retailers are suffering from FOMO and providing the demand side of the market. On the other hand, a bearish cycle often ends when the big players enter the ‘accumulation phase’ where they start buying coins at a discount from weaker hands.
During this market phase, known as the “capitulation phase”, smaller players usually panic-sell their assets and experience significant losses while smart money accumulates.
The NUPL metric, which shows the total amount of profit/loss as a ratio, is shown in the chart. The measure has fallen to the blue range (= -0.099), as the price of bitcoin falls below $20K for the first time since the Covid crash. The market has historically seen major capitulation when this metric falls into the blue range, initiating the next bullish cycle.
PrimeXBT Special Offer: Use this link to register and enter code POTATO50 to get up to $7,000 on your deposit.
Disclaimer: The information found on Cryptopotato is that of the cited authors. It does not represent the opinion of Cryptopotato whether to buy, sell or hold any investment. You are advised to do your own research before taking any investment decision. Use the information provided at your own risk. See disclaimer for more details.
Cryptocurrency charts by TradingView.