Bitcoin’s price has been stagnant lately, struggling to break through the $30K resistance level. However, this period of consolidation could be a precursor to a significant move in the near future. Technical analysis suggests that the current phase is corrective, with minor rejections and strong support at the 100-day moving average (MA).
Looking at the daily chart, we can see a gradual retracement towards the 100-day MA at $28.5K. This moving average has proven to be a solid support level, preventing further declines for several months. If the price drops below the 100-day MA, it could indicate a shift in focus towards the 200-day MA and the lower boundary of the multi-month channel. The 200-day MA holds considerable importance as it could act as support and potentially drive the price higher.
On the 4-hour chart, Bitcoin’s price appears to be range-bound between the $30K resistance and $25K support levels. This correction phase started in early July, with the price approaching the critical 0.5 and 0.618 Fibonacci retracement levels. This region serves as a crucial support zone and may be the target for the current correction. A positive reaction in this area could lead to a new bullish phase and a surge in price. However, a break below the range between the 0.5 and 0.618 Fibonacci levels could result in a rapid decline towards the lower threshold of around $25K.
In addition to technical analysis, on-chain data provides insights into Bitcoin’s supply dynamics. Approximately 69.2% of all BTC has remained dormant for over a year, indicating a strong belief in its long-term value despite its volatility. Further analysis reveals that 55.7% of Bitcoin has remained untouched for over two years, showcasing a “HODLing” strategy among many holders. This trend continues, with roughly 40.1% of Bitcoin remaining dormant for more than three years, demonstrating unwavering faith in Bitcoin’s potential. Those who have held onto their Bitcoin for over five years make up around 29.1% of the total supply, emphasizing their long-term commitment to the cryptocurrency. This strategy of holding Bitcoin for extended periods significantly affects its price, as it reduces the available supply in the market. Combined with increasing demand, this scarcity can potentially push the price higher in the long term.
In conclusion, Bitcoin’s price is currently consolidating near a pivotal level, with strong support at the 100-day MA. Technical analysis suggests that a break above the $30K resistance could trigger a rally towards the $38K resistance zone. On-chain data reveals a significant portion of Bitcoin being held for extended periods, indicating a belief in its long-term value. As always, it’s important to monitor price movements and market dynamics closely to make informed investment decisions.