Is a wedge or bull flag expanding? Either way, Bitcoin seems to be losing momentum
Bitcoin's market structure on the weekly time frame shows what some analysts have described as a bull flag or expansion pattern, which if completed will send BTC to new all-time highs.
Despite the holding form of the chart pattern in the current price streak, Bitcoin continues to trade above resistance levels and remains vulnerable to macroeconomic developments.
BTC/USDT Weekly Chart. Source: TradingView
In this week's The Week Onchain Newsletter, Glassnode analysts concluded that Bitcoin's strength is declining as the market has been stuck in a “structurally ordered downtrend” for the past 5-months. Among other factors, the analysts cited waning interest in the market, which was cooling off from euphoria over the launch of a Bitcoin ETF and BTC hitting a new all-time high above $73,000.
Basically, the market has reached a point where the bullish stimulus many analysts have been predicting for a long time has been confirmed, and the rest of the bullish factors are out of time (i.e., market participants are looking for Trump's current victory, strong BTC and ETH ETF earnings, the US Federal Reserve implementing rat cuts and possibly resuming more numerical efficiency down the road).
Yes, the data on the chain shows that Bitcoin whales are accumulating in the lows of the current price range and some technical indicators are showing high results from the current market structure. ?
Let's take a quick overview of some Bitcoin charts to see the other side of the coin.
Do lower highs signal a bull market losing momentum?
On the weekly time frame, Bitcoin price continues to paint lower highs to all-time highs with each breakout test. Each breakout failed to establish $70,000 as support and comparing this to the MACD, which rolled over, evaporated some of the key factors that initially pushed the price of BTC to a series of all-time highs.
As for the MACD, in the weeks following Bitcoin's all-time high, the MACD fell below the signal line and the gap between the MACD and the signal line has widened since then. Neither has crossed below 0 (which is a sign of depression) but the post-all-time-high decline in momentum mirrors Bitcoins price action and the biggest decline in previous market cycles in 2018 and twice in 2021.
BTC/USDT Weekly Chart. Source: TradingView
Similar results can be seen on the weekly RSI, which reached a low of 88.47 in early August, when Bitcoin traded above $73,000 in early March and traded as high as 44. Since December 2022, the market has seen a gradual rise as it exits oversold conditions, with BTC reaching a peak of $73,000.
This analysis does not suggest that the bull market is over or that the chart is perfect, especially considering that Bitcoin's price action and market structure have a history of changing on a dime depending on the nature of macroeconomic and geopolitical events. But in a market where pretty much everyone is expecting six-figure all-time highs, a Trump election victory, and a Fed rate cut to higher bitcoin prices, it's good to at least consider the results against the market's bias. .
Related: Trump's approach to crypto voters ‘seems to pay off' – poll
Traders should raise their voice
Aggregate volumes have been declining, a measure that coincides with the conclusion of CryptoQuant, a measure of bitcoin's apparent demand that says it has “severely declined.”
The demand for Bitcoin. Source: CryptoQuant
According to CryptoQuant, open demand is the difference between the daily total Bitcoin block grant and the daily change in the amount of Bitcoin that has been standing for a year or more.
“Demand has reduced to a negative 36K growth from a 30-day high of 496K Bitcoin in January 2021. As demand has waned, the price has fallen from ~$70K to a low of $49K.
As shown in the historical volume chart from January 2023 to August 30, since the ETF euphoria and reaching new all-time highs, overall Bitcoin exchanges have been declining.
Bitcoin historical rate on currency exchanges. Source: Coinglass
The need for space with future driving demonstrations
Recent Bitcoin price rallies based on futures and below-range rallying patterns from hodlers and spot ETFs are what fuel the continued demand in the spot markets?
Popular crypto derivatives analyst Skew does a good job of explaining how price volatility moves to the top of Bitcoin's range due to liquidity in the futures markets.
$BTC Market Flow Update $BTC Cumulative CVDs and Delta Scalable Receiver Buying Led Each Push From Lows Around $56K
Outside of $61K, the position was traded with a high amount of short squeeze-crowded trades.
We currently have some sales pressure from the place… pic.twitter.com/2vJJEKE2BA
— Skew Δ (@52kskew) August 26, 2024
Looking at the overall order book flow, it's easy to see how spot bids can absorb Bitcoin's sharp downside moves as forced buying occurs during short squeezes, but the lack of sustained spot buying prevents Bitcoin from overcoming the wall of demand in each region. High.
BTC/USDT Perps Daily Chart. Source: TRDR.io
From a technical analysis perspective, Bitcoin price is certain to hit a bullish flag or extend a wedge structure, providing traders with predictable accumulation, momentum trading and oversold opportunities in the $52,000 to $48,000 range.
Expected resistance and profit zones are in the range of $62,000 to $67,000, but beyond the range trade, what traders should really watch for is a general decrease in total volume, weekly lows and a change in the trend of decreasing swings. The high is primarily the result of a short squeeze in the underlying markets.
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
