The Bitcoin price remains depressed within a narrow range due to selling by short-term holders and miners.
Analysts and investors are perplexed by the Bitcoin price’s failure to move despite clinging to support at $30,000 even as skeptics draw a line at $32,000 resistance.
According to on-chain insights from CryptoQuant, the largest cryptocurrency “been lodged within a narrow corridor for the past three months” The answer, according to the on-chain analytics platform, resides in the protocol’s fundamental factors, such as supply and miner activity.
While we will examine Bitcoin’s fundamental position shortly, BTC continues to experience the pressure of an aggressive bear camp, falling 1% to $30,055. Its trading volume has reached $14 billion, and its market capitalization has remained at $582 billion
The leading altcoin is following in the footsteps of Bitcoin, falling 1.6% to $1,898. As discussed in the previous analysis, the Ethereum price must reclaim the $1,900 support level for the resumption of the uptrend above $2,000 to be sustained.
Effects of Bitcoin Losing Support at $30,000?
As depicted on the daily chart, the consolidation of the Bitcoin price into a narrow rectangular pattern indicates that the tug-of-war between bulls and bears is nearing its tensile limit. This implies that investors should be prepared for two incompatible outcomes.
A breach and maintenance of the immediate support at $30,000 could substantiate declines to $28,000 and $25,000 in that order. Short positions below $30,000 may amplify the selling pressure, resulting in instability at important but minor support areas, as illustrated by the 200-day Exponential Moving Average (EMA) (in purple) and the subsequent buyer congestion at $29,000.
A confirmed sell signal from the Moving Average Convergence Divergence (MACD) indicator bolsters the pessimistic outlook; despite the sell signal, manifested by the blue MACD line crossing above the red signal line, short traders should not underestimate the short-term support at the 200-day EMA, as it may provide the liquidity necessary for the Bitcoin price to break out above $32,000.
The alternative outcome is a breakout above the rectangle pattern, in which case the Bitcoin price will have favorable conditions for a rally, such as enhanced investor sentiment, rising trading volume, and expanding liquidity.
Support at $30,000 and the 200-day exponential moving average (EMA) are crucial levels to monitor. A break above the rectangle and resistance at $32,000 could signal the start of a rally to $35,000 and $38,000 on the upside.
Why Bitcoin Is Stuck In Place – CryptoQuant
As presented by analytics platform CryptoQuant, on-chain data attempts to explain what is holding Bitcoin’s price from breaking out of the narrow consolidation. Researchers at the firm found that starting from April this year, the STH (Short-Term Holders) supply began to decrease.” This cohort continues to offload BTC wallets, thus applying more pressure on the market.
The Miner Exchange Inflow Realized Price states that “miners are actively selling their Bitcoin reserves.” The researchers believe this is not a unique occurrence as it mimics miners’ behavior ahead of the halving – expected in April 2024.
Miners often sell months before halving to acquire equipment to increase efficiency, with mining activities becoming increasingly tricky each four-year cycle.
Another factor hindering a Bitcoin price breakout could be the Volatility Index. After considering the inflow and outflow of money into and out of BTC markets, the volatility index shows “a significant decrease in market activity” since April 2023.
3/ $BTC: Volatility Index 1Y.
This volatility index, which considers price volatility, inflow/outflow (funds flow into and out of the market), and net taker ratio (buyer-seller ratio), demonstrates a significant decrease in market activity starting from April this year. pic.twitter.com/L4GmvsyiU8
— CryptoQuant.com (@cryptoquant_com) July 18, 2023Some, if not all, factors must change dynamically to support a sustainable breakout in Bitcoin price to $35,000 and $38,000, respectively. Otherwise, it declines to $28,000, and $25,000 could be in the offing.
