After a prolonged period of uncertainty, Bitcoin’s price has finally broken through a critical technical resistance level.
This has led some investors to question whether the bear market has come to an end or if this recent rally is just a temporary rise in price, also known as a bull trap.
The Daily Chart
Bitcoin has surpassed a significant and decisive resistance region of $30K, which has brought back bullish sentiment to the market. Many believe that the bear market has ended and that Bitcoin has reached its bottom at $15K, now that the price has broken above that static sentimental level.
However, it is still too early to declare this recent uptrend as the start of the next bull market. The price must surpass the upper trendline of the ascending channel and then retest it in the form of a pullback.
Furthermore, if the price is rejected from this critical region and drops, the $25K range will provide the strongest support since it also aligns with the 50-day moving average.
The 4-Hour Chart
Bitcoin has recently experienced a significant spike, breaking above the upper threshold of a consolidation correction wedge pattern and printing notable green candles in the 4-hour timeframe.
If the price manages to stay above the $30K resistance region and successfully retests it as a pullback, there is potential for an extended bullish rally toward the $38K region.
However, there is currently a significant divergence between the price and the RSI indicator, increasing the probability of a short-term plummet.
The RSI indicator has entered the overbought region, indicating the need for a short-term correction for the next healthy bullish rally.
Bitcoin’s price has made a significant move by breaking through a critical technical resistance level. However, this price surge could simply be a temporary increase, known as a bull trap.
To gain insight into what may happen next, it’s worth examining the behavior of Bitcoin miners. By analyzing their reserves, it’s clear that they have been using the recent price increase to sell off some of their holdings to cover their operational costs.
This metric has been in a slight downtrend over the past month, indicating that miners have been selling off their coins at an increasing rate, and there are no signs that this trend will slow down anytime soon.
If this selling trend continues, there is an increased risk of a bearish reversal in the short term, as the market will be flooded with excess supply. This could cause prices to drop again as demand struggles to keep up with the influx of coins being sold by miners.
Therefore, keeping an eye on the behavior of miners will be essential in determining the direction that Bitcoin’s price may take soon.