Bitcoin Price Falls Below $21K, Bringing More Capitulation Or Just Consolidation?

Bitcoin Price Falls Below $21K, Bringing More Capitulation Or Just Consolidation? – Mail Bonus

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On July 26, Bitcoin (BTC) price fell below $21,000, giving up most of the gains accumulated in the previous week and returning to the $23,300 to $18,500 range that Glassnode analysts describe as a “30-week high and 30-week low.”

Several analysts and traders credit the July 26-27 Federal Open Market Committee (FOMC) meeting and the Federal Reserve’s expected rate hike as the main reasons for the current selloff.

Barring the announcement that the US economy is in recession, several traders believe that the expected 75 to 100 basis points (BPS) increase will be followed by a relief rally that could send BTC, Ether and other major altcoins snacking again. at the top of their current range. Of course, this sentiment reflects more speculation than sound analysis, so take it with a grain of salt.

Bitcoin week 30 price range. Source: Glassnode

Given that BTC price simply continues to trade in the same range it has been in for the past 42 days, the real question is whether the market will see more consolidation or another round of bullishness.

In their July 26 on-chain newsletter, Glassnode analysts claim that investors can find their “conviction through the confluence” of multiple technical and on-chain metrics that suggest the acquisition peak is long past.

According to analysts, the rapid liquidation threw many metrics into “extreme statistical anomalies” and with the worst possible sell-off behind them, Bitcoin prices were expected to return to the high $20,000 region.

Glassnode notes that:

“June’s decline in prices has resulted in the lowest 4-year rolling Z-Score value on record.”

And the analysts explained that the 4-year rolling MVRV Z-score “indicates underestimation for all bear cycle bottoms, including 2015, 2018 and the March 2020 flash crash.”

Bitcoin MVRV Z-Score 4 Year Rolling Chart. Source: Glassnode

When compared to various groups of long and short sellers, and metrics such as Realized Price, Mayer Multiples and longer-term daily and weekly moving averages, Glassnode suggests that a convergence of indicators and historical data points to growing bullish momentum.

On-chain data spot a bottom, but what does technical analysis say?

From the point of view of technical analysis, Bitcoin’s move to $24,200 showed a short spread from the current range, but the inability to maintain momentum at this level was a necessary option of a lower support retest of the midline range near the 20-day moving average ($21,500).

According to independent market analyst Michaël van de Poppe, the $21,600 area for BTC was holding and below this the asset’s price action is subject to comments from this week’s FOMC remarks.

CryptoISO forward similar sentiment regarding the correlation of stocks with Bitcoin and the importance of the $21,500 area for BTC price.

Fractal lovers will note that the price movement within the current range is eerily similar to the May 8 to July 12 range-based trading and post-breakdown that occurred on July 12, but experts would quickly point out that back-to-back disasters like the Exploding Voyager , Celsius and 3AC played a big part in that selloff, but now there don’t seem to be any visible black swan events on the horizon.

BTC/USDT Daily Chart. Source: Tradingview

Regardless, both periods reflect 34 to 42 days of sideways trading, and in many cases, veteran trader Peter Brandt has identified the current market structure as a “bearish rectangle” technical analysis pattern.

Bearish rectangle breakdown. Source: MoneyControl.com

If the pattern breaks down from the current range, this would put the price in the $14,500 to $13,000 area that some traders have been eyeing.

BTC/USDT Daily Chart. Source: Tradingview

Finally, last week’s range break to $24,200 (July 20) cut into the upper band of the Bollinger Bands momentum indicator and now that prices are below the midline, there is an increased chance that BTC could trade down to the lower band which is conveniently located at the bottom of the current range ($24,200 to $18,600).

Intra-field transactions aren’t much to worry about until the trigger for a breach or failure occurs. Perhaps tomorrow’s (July 27) earnings from major tech companies, the state of the market at the opening bell, and comments from the FOMC will determine which direction Bitcoin decides to take.

The views and opinions expressed here are solely those of the authors and do not necessarily reflect the views of Cointelegraph.com. Every investment and business involves risk, you should do your own research when making a decision.