Bitcoin may be experiencing a price recovery towards the $57,000 level after a sharp 20% drop on Monday that sent the largest cryptocurrency on the market to a low of $49,000 not seen since February. Still, BTC is not out of the woods yet, as a concerning pattern has emerged on its 10-day chart.
Analysts Spot Bearish Signals
According to technical analyst Ali Martinez, Bitcoin is forming a rising wedge pattern, a bearish continuation pattern often linked to further downtrends.
While BTC may climb as high as $57,000 at the upper boundary of the wedge, Martinez warns that investors should look for a potential breakdown that could pull the cryptocurrency back down to around $51,000.
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Martinez also highlighted that one of Bitcoin’s key support levels, based on its market value to realized value (MVRV) pricing bands, is currently at the $54,000 mark. This level is crucial in preventing a more substantial drop towards the $40,000 region. Conversely, if the $54,000 support holds, the analyst sees the key resistance on the upside at $67,000.
Another analyst, Rekt Capital, has also observed that Bitcoin is showing signs of attempting to recover and fill the new CME gap above with the currency’s current price recovery of 4.5% recorded in the last hours, which ranges from $59,400 to $62,550. However, the analyst noted that a smaller CME gap has formed at a slightly lower level, between $53,700 and $54,600, which any short-term dip in the market could potentially fill.
Reasons For Optimism In Bitcoin Market
Amidst these bearish technical indicators, there is a glimmer of optimism, as according to Ki Young Ju, the founder and CEO of market analysis firm CryptoQuant, several key metrics suggest that the bull market remains intact despite the recent pullback.
According to Ju, one of the key signs is the recovery in Bitcoin’s hashrate, a measure of the computing power dedicated to the network. Ju contends that miner capitulation is nearly over, with the hashrate nearing all-time highs.
This is significant, as US mining costs are approximately $43,000 per BTC, indicating that the hashrate will likely remain stable unless prices dip below this level.
Additionally, Ju has observed significant inflows of Bitcoin into custody wallets, indicating that large institutional investors, or “whales,” are actively accumulating digital assets.
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