Bitcoin (BTC), the price of bitcoin, fell below $21,000 on July 26. This reversal of gains and a return to the $23,300-$18500 range that Glassnode analysts call “the Week 30 high” and “the Week 30 low”.
A few traders and analysts attribute the current sell-off to the Federal Open Market Committee (FOMC), meeting on July 26 and 27 and the anticipated Federal Reserve rate increase.
A few traders believe that the 75-100 basis point (BPS), hike that is expected will be followed by a rally that could see Ether, BTC and other large-cap altcoins return to the top of the current range. This sentiment is speculative and not based on sound analysis so be careful.
Bitcoin week 30 price range. Source: Glassnode
BTC’s price is trading in the same range it has for the past 42 day. The real question is whether there will be more consolidation or another round.
Glassnode analysts suggest that investors can “convince themselves through the confluence of multiple technical and onchain metrics” which suggests that capitulation is long over.
Analysts believe that rapid deleveraging caused many metrics to experience “extreme statistical deviations”. With the worst of the selling behind us, Bitcoin price was likely to return to the high $20,000 area.
Glassnode points out that:
“The lowest 4-year rolling Z-Score value has ever been recorded in June price action.”
Analysts explained that the rolling MVRV Z score of 4 years “signaled undervaluation” for bear cycle bottoms including 2015, 2018 and the March 2020 flash crashes.
Bitcoin MVRV Zcore 4 Year Rolling Chart. Source: Glassnode
Glassnode’s analysis of various short-term and long-term sellers and metrics such as Realised Price, Mayer Multiple, longer-term daily, and weekly moving averages suggests that there is a confluence between historical data and indicators that points to increasing bullish momentum.
The on-chain data points to a bottom. But what does technical analysis tell us?
Technical analysis saw Bitcoin’s rise to $24,200 as a short breakout, but inability to sustain momentum at that level made it necessary to retest lower support at the range-midline of the 20-day moving mean ($21,500).
Independent market analyst Michael van de Poppe stated that $21,600 was the ideal area for BTC to be held. Below this, the asset’s price action will depend on the FOMC comments this week.
Markets are correcting, and the preferred price was $21.6K to keep for #Bitcoin. This is a critical breaker if the market breaks to the upside and reaches new highs. We expect a range of $20.5K-20.7K to hold #Bitcoin tomorrow at the FOMC. If upwards after. pic.twitter.com/tueXPNprza
— Michael van de Poppe (@CryptoMichNL) July 26, 2022
CryptoISO also expressed similar sentiments regarding the relationship of Bitcoin to equities and the importance the $21,500 area for BTC price.
Confluence with support from NQ was a part of the desire to reach the 21.5k BTC zone. It is gone. It is possible to test a breakout right now, but it all looks pathetic. It is worth selling before tomorrow. You should be bullish if you want to see it but earnings are driving it so far. pic.twitter.com/rh5d3wKgjG
— July 26, 2022, CryptoISO (@crypto_iso).
Fractal enthusiasts will be pleased to see that the price action in the current range is very similar to that of the May 8 to July 12 range-bound trading, and subsequent breakdown that occurred on July 12. However, analysts would quickly point to back-to-back calamities such as Celsius, Voyager and 3AC that played a significant part in that sell-off. Now, however, there seems to be no discernible black-swan events.
Daily chart of BTC/USDT Source: Tradingview
Both reflect 34-42 days of sideways trading. On many occasions, Peter Brandt, a veteran trader, has described the current market structure in a “bearish rectangular” technical analysis pattern.
Bearish rectangle breakdown. Source: MoneyControl.com
If the pattern is broken to the downside of the current range, it would place the price within the $14,500-$13,000 zone traders have long coveted.
Daily chart of BTC/USDT Source: Tradingview
Last week’s breakout to $24,200 (July 20,) broke through the upper Bollinger Bands momentum indicator. Now that the price is below its midline, there are increased chances that BTC could trade lower to the lower band, which is conveniently located at the bottom end of the current range ($24,000. to $18,600).
Trading within the range is nothing to be concerned about until a breakout catalyst emerges. Bitcoin’s future direction will be determined by tomorrow’s earnings (July 27), comments from the FOMC, and the state of the market at opening bell.
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Eileen Wilson –Technology and Energy
My Name is Eileen Wilson with more than 5 years of experience in the Stock market industry, I am energetic about Technology news, started my career as an author then, later climbing my way up towards success into senior positions. I can consider myself as the backbone behind the success and growth of topmagazinewire.com with a dream to expand the reach out of the industry on a global scale. I am also a contributor and an editor of the Technology and Energy category. I experienced a critical analysis of companies and extracted the most noteworthy information for our vibrant investor network.