Bitcoin’s price is approaching a significant level, which could prove decisive for the mid-term trend of the market. Although there are some positive signs on the technical charts, it remains too early to decide whether a new bullish phase is on the horizon.
Technical Analysis
By: Edris
The Daily Chart:
On the daily chart, Bitcoin’s price has been forming a large falling wedge over the last few months. The price has recently bounced back from the lower boundary of the pattern and is currently trending upward toward the significant $18K resistance level.
In case of a bullish breakout from the $18K level and the 50-day moving average located around the same price, a rally towards the upper boundary of the pattern, near the $20K psychological level, could be expected.
On the other hand, a rejection from the $18K level could cause another decline toward the $15,500 level, and another retest of the lower trendline of the falling wedge would occur.
The 4-Hour Chart:
Looking at the 4-hour timeframe, the price has successfully breached the minor $16,800 resistance level and is retesting it at the moment.
In the event of a successful pullback and continuation, a rally toward the $18K area would be imminent. However, the RSI indicator should be monitored closely in the coming days, as it has recently produced an overbought signal. It might also be forming a bearish divergence shortly.
The latter may lead to a bearish reversal in the near future, which could prove disastrous. It would likely initiate a drop back to the $15,500 support area and perhaps even lower if the level fails to hold.
On-chain Analysis
Bitcoin Miner Reserve
2022 has been showcasing how bad a Bitcoin bear market can be. After multiple defaults and bankruptcies during the last few months and a gruesome decline in price, the miners are seemingly beginning to capitulate.
Miners may be considered the most important participants in the Bitcoin network, as they are responsible for validating and securing it.
They have also accumulated massive amounts of BTC during the last few years, and their buying or selling pressure can move the price significantly. Therefore, miners capitulating is terrible news.
According to the Miner Reserve metric, which measures the total amount of Bitcoin held by miner wallets, they have been selling BTC in huge chunks recently, which can be seen on the chart by the significant plunge in the reserve.
This worrying signal comes after multiple rumors about miners failing to repay their debts, and therefore, could set up the market for another massive crash in the short term.
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