Source: PaxForex Premium Analytics Portal, Fundamental Insight
The Bitcoin correction appears to slowly come to an end, at least temporarily, setting the stage for a short-term reversal rally. Trading volumes could decrease as long-term investors are pulling their Bitcoins from cryptocurrency exchanges and placing them into cold storage. CryptoQuant data shows that the past 30 days saw the removal of 29,300 Bitcoins or 1.4% from exchanges, a trend that could continue as long-term investors prepare to ride out the most recent slump. According to Glassnode, an on-chain analytics firm, 95% of Bitcoin supply has not moved in the past 30 days, which provides a floor under Bitcoin. The $25,000 level presents a psychological support level enforced by numerous factors.
Bitcoin and the cryptocurrency sector will face selling pressure amid the ongoing unwinding of FTX assets. The defunct company has $3.4 billion in cryptocurrency assets on its balance sheet, and the bankruptcy plan calls for the sale of $100 million weekly, which could rise to $200 million. It can add short-term selling pressure, but the forced, orderly liquidation also creates buying opportunities for patient investors.
Adding to the uncertainty is a pending death cross formation, and the question is if market participants have already priced in the bearish development. The decrease in liquidity and removal of Bitcoins from hot wallets suggests that the bulk of selling pressure is in the rear-view mirror, but that volatility could increase. Leaving on a bullish development, the listing of BTCBSC, evolving on the dynamic Binance Smart Chain, has created an efficient and cheap alternative to BTC/USD, making it an asset to monitor.
The forecast for the BTC/USD turned cautiously bullish after this cryptocurrency pair stabilized at a key horizontal support area, where bulls have dug in to fend off ongoing bearishness. The Ichimoku Kinko Hyo Cloud began to widen with the Senkou Span A descending and the Senkou Span B ascending, suggesting more volatility ahead. Confirmation of a pending volatility rise exists from the flat Kijun-sen and the downward-shifting Tenkan-sen. Traders should also monitor the CCI after it has recorded a lower low followed by a breakout from extreme oversold territory. This technical indicator has plenty of upside momentum, and a push above zero could ignite a short-term rally in this cryptocurrency pair. Can bulls regain complete control over the BTC/USD and push price action into its horizontal resistance area? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.
Should price action for the BTC/USD remain inside the or breakout above the $25,280 to $26,375 zone, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 25,810
- Take Profit Zone: 27,475 – 28,085
- Stop Loss Level: 24,725
Should price action for the BTC/USD remain inside the or breakout above the $25,280 to $26,375 zone, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 24,725
- Take Profit Zone: 21,740 – 23,260
- Stop Loss Level: 25,280
Open your PaxForex Trading Account now and add this currency pair to your forex portfolio.
