Written by 2:30 pm Bitcoin

Bitcoin Price Faces Significant Move – but Is It Bullish or Bearish?

The Bitcoin (BTC) price broke down from a short-term pattern and now risks falling toward a new yearly low.

Bitcoin price has been hit by a number of negative news events this year. First, there was the Terra implosion in May, followed by the FTX collapse in Nov.

While these events were not directly linked to Bitcoin, they negatively affected the price and cryptocurrency market at large.

An interesting angle to look at the BTC price movement comes from the time it will take until the next halving. Bitcoin has completed 65% of the time until the next halving, which will be at block 840,000, likely to fall between Feb. and June 2024. In all previous cycles, the bottom was reached by the time 65% of the period between two halvings was done.

Bitcoin Price Hovers Above Long-Term Support

The Bitcoin price has fallen since reaching an all-time high of $69,000 in Nov. 2021. The downward movement led to a low of $15,479 in Nov. 2022. The BTC price bounced afterward (green icon), validating an ascending support line (solid) that has been in place since March 2020. It is worth mentioning that the line is created by connecting the price closes instead of the lows. Using the wick lows, there is a more gradual ascending support line (dashed) that is currently near an average price of $10,000.

Despite the overwhelmingly bearish price action, the weekly RSI is bullish. It has generated bullish divergence (green line), and its trend line is still intact. However, in order to confirm its bullishness, it has to break out from its descending resistance line (black) and ideally move above 50.

So, the price action and technical indicator readings are not in alignment. The price action is mostly leaning on bearish despite the ascending support line. Technical indicator readings are leaning more on the bullish side due to the bullish divergence.

Short-Term Breakdown Adds to Woes

The technical analysis from the daily chart provides a bearish outlook. It shows that on Dec. 14, the BTC price validated the $18,300 area as resistance (red icon) and broke down from an ascending parallel channel two days later. 

Additionally, this downward movement caused the daily RSI to break down from its bullish divergence trend line (green line) and fall below 50. These are both considered bearish developments. 

So, the downward movement toward $15,800 is the most likely scenario. It is not yet certain how this fits with the long-term outlook since this drop may or may not cause a breakdown from the long-term ascending support line.

To conclude, the direction of Bitcoin’s trend still needs to be determined. Losing the bullish divergence in the weekly time frame or breaking down from the ascending support line would be major bearish developments. On the other hand, reclaiming the $18,300 resistance area would be extremely bullish.

For BeInCrypto’s latest crypto market analysis, click here

Disclaimer

BeInCrypto strives to provide accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. You comply and understand that you should use any of this information at your own risk. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.

Source link

Close