Bitcoin Price Analysis: BTC Retests Key Support For 3rd Time



BTC continues to consolidate with several new tests of the critical low of $ 40.7,000. The recent reduction in risk globally has added selling pressure to BTC, but so far it looks like $ 40.7,000 is maintaining support with a solid push to the upside, reaching $ 42.3,000 at the time of writing.

BTC continues to hold a larger technical structure as $ 40,000 has been established as strong backing. Even with negative news, macro risk and a rising dollar, Bitcoin has shown resilience by holding $ 40.7,000 on multiple occasions over the past week.

Chart by TradingView

$ 40.7,000 is a very important level to maintain, as this is the highest level BTC can reach to complete the corrective wave of Wave 2. Falling below $ 40.7,000 will increase the likelihood of retesting $ 40,000 or potentially increasing to $ 37.3,000 to $ 39.3,000 due to liquidations or additional risks in global equities.

IMG_5592-min-scaled.jpeg
Chart by TradingView

Open interest remains flat

In the near term, open interest has remained stable, standing at around $ 8 billion, even with the withdrawal of $ 45.2,000 to $ 40.7,000 over the past week. Previous withdrawals of $ 52.9,000 resulted in massive multi-billion dollar selloffs, triggering stunts of hard sells, pushing spot prices down as weak-handed panic sold.

Over the past two weeks, the size of the closeouts has trended downward, which is a positive signal, suggesting weaker hands are positioned and remain in the market looking to sell at current prices.

This could explain why BTC continues to hold $ 40.7,000 despite the rising dollar and falling global stocks. In the short term, it is essential that BTC hold $ 40.7,000 as support. If $ 40.7,000 is retested for the fourth time, the probability of breaking support will increase, potentially pushing BTC down to $ 37.3,000 to $ 40,000.

On-chain metrics continue to show strong accumulation

As we’ve reported for weeks, long-term holders didn’t sell the latest prints and kept piling up. Most of the selling pressure came from liquidation events and weak-handed panic sales.

Although the short-term price action has been weak, the chain measures show no major warning of a bear market.

Bear markets occur after parabolic highs, with deep price corrections, where long term holders and miners continue to aggressively distribute.

The 55% crash in May 2021 did not lead to further distribution from long-term holders and miners. Instead, they started to pile up, strongly suggesting that this is not a bear market.

The charts below highlight the movement in the average age of coins during post-BTC bullish times in 2013 and 2017, ahead of the bear market. The average age of coins continued to decline after the BTC spike, confirming a further distribution of long-term holders.

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Chart by CryptoQuant
IMG_5575-min-scaled.jpeg
Chart by CryptoQuant

The following chart shows the mid-cycle pullback of 2021 where BTC fell 55% from highs of $ 64.8,000 to $ 30,000. The average age of coins began to increase, confirming that long-term holders were accumulating instead of selling.

IMG_5584-min-scaled.jpeg
Chart by CryptoQuant

This is exactly what happened during the mid-cycle pullback of 2013. After BTC spent around six months consolidating with an increasing trend in the average age of coins, BTC hit new ones. historic highs and began the parabolic blast phase to end the bull market of 2013.

What to watch

In the short term, it is critical that BTC continue to hold $ 40.7,000 as the lowest level for the completion of Wave 2. The more $ 40.7,000 is tested, the more likely it is to be broken. high. It is important for BTC to continue pushing higher to hit a high above $ 45.1,000 this week.

The 4 hour chart is showing signs of consolidation with the flattening of the 21 and 50 hour moving averages. This indicates a potential attempt for BTC to move closer to the key level of $ 45.1,000, completing the near-term consolidation. If the breakout attempt fails and $ 40.7,000 struggles to maintain support, BTC could see a downside risk of $ 37.3,000 to $ 40,000.

Despite the near-term uncertainty and the absence of risk, the overall fundamentals and chain trend remains firmly bullish as long-term holders and miners do not distribute aggressively. The high accumulation and HODL behavior of these entities is a positive sign. This pullback could be a short-term upheaval, in the midst of a bull market, with a significant rise coming later this year.

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Cryptocurrency Charts by TradingView.


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