The price of Bitcoin (CRYPTO: BTC) could potentially drop to $30,000 due to a looming bearish divergence, even as bulls are steaming ahead to the $40,000 mark.
What Happened: Despite the excitement surrounding the potential approval of spot Bitcoin ETFs causing a Bitcoin price surge, the recent delay by the Securities and Exchange Commission (SEC) has dampened the bullish momentum, reported FXStreet.
Even though “whale” investors have provided some support, indications of a significant Bitcoin rally reversal are emerging.
Bitcoin’s price is currently creating higher highs, while the Relative Strength Index (RSI) is marking lower lows.
This disparity, referred to as bearish divergence, denotes a weakening of the bullish momentum driving the price rise. As a result, the rally might soon come to a halt, and a correction in Bitcoin’s price would authenticate the bearish divergence.
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This could result in Bitcoin’s price dropping to the support levels at $36,833 and $33,901, with a high likelihood of it falling to $31,507. If it breaks this support, it could drop to the critical psychological support level of $30,000, potentially sparking a new wave of Bitcoin accumulation driving the price back up.
Why It Matters: The bearish divergence will only be confirmed if the price dips. According to the Market Value to Realized Value (MVRV) ratio, investors who purchased Bitcoin in the previous month are currently enjoying a 3.4% profit. This modest profit isn’t sufficient to stimulate profit booking, which could trigger a sell-off.
Instead, investors may opt to liquidate their holdings when the MVRV touches 6.7% to 16.8%.
Moreover, whale addresses holding 1,000 to 10,000 Bitcoin have continued to accumulate, adding nearly 60,000 Bitcoin in the past week alone.
This acquisition, valued at $2.26 billion, has increased their total holdings to 4.73 million Bitcoin.
As long as profits don’t reach saturation and investors deem selling for profit as more profitable, Bitcoin’s price decline could be postponed. This context is crucial in the light of recent reports on Bitcoin’s struggle to gain momentum compared to other cryptocurrencies like Dogecoin and Ethereum.
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