After a prolonged period of sideways movement, Bitcoin entered a downtrend, testing a key support area around $60K. However, there are hopes for a resurgence in buying activity, potentially leading to a rebound.
Technical Analysis:
Daily Chart: A thorough examination of the daily chart reveals an extended sideways phase within the critical price range of $60K to $72K. Recent price action has seen a decline toward the lower end of this range. Bitcoin now sits at a crucial support zone between the 0.5 ($62,181) and 0.618 ($59,444) Fibonacci retracement levels, aligned with the important 100-day moving average at $59K. This support area holds significance and could spark a bullish reversal in the short term. However, a sudden breach below this level could trigger a long squeeze event, leading to a significant downward movement.
4-Hour Chart:
Analyzing the 4-hour chart reveals increased selling pressure after Bitcoin failed to reclaim the upper boundary of a descending wedge. This resulted in a noticeable downtrend toward the lower trendline of the wedge, around $60K. Upon reaching this critical level, selling pressure met demand, leading to a minor consolidation phase. However, sellers are still determined to breach the lower boundary of the wedge. If buyers regain control and find support around this level, a bullish rebound toward the previous major swing high of $68K could occur. Nonetheless, $60K remains a key reference point for Bitcoin, with price action around it likely shaping the cryptocurrency’s near-term direction.
On-chain Analysis:
Bitcoin is still in a prolonged consolidation phase, nearing the $60K mark. In this context, examining sentiment analysis within the futures market provides insights into its potential trajectory. Recent corrective retracements have led to a significant decline in funding rates, approaching levels near zero. This decline is positive in the long term, easing the pressure for further liquidations and setting the stage for renewed activity in both long and short positions in the perpetual market. Consequently, the market seems poised for a renewed upward trend, signaling a possible end to the current phase of uncertainty and sideways movement.
