Risks of short term pullback Bitcoin (BTC) price seems to be rising as per the chart analysis.
Bitcoin The last one was changing hands near $27,500, down about 6% from Friday’s nine-month high of $29,300.
cryptocurrency This week’s repeated failure to hold above resistance such as the late May 2022 low of $28,000 has some traders concerned that a short-term pullback to key support in the mid-$25,000s could be imminent.
And of bitcoin Failure to sustain above $28,000 is not a factor suggesting an increased risk of a short-term pullback.
In recent times, of bitcoin There is a bearish divergence on the 14-day Relative Strength Index (RSI).
This is where despite the steady growth Bitcoin Price, RSI is falling. Some technicians see this as a sign of a correction to come.
Furthermore, bitcoin’s latest push above $20,000 pushed an indicator of price momentum to an all-time high, potentially indicating an overheated market.
Earlier this week, bitcoin’s Z-score jumped above its 200-day moving average (DMA) to 3.0.
This means that the price was more than three standard deviations above its average over the past 200 days, an extremely rare event that may indicate that the upside momentum is getting too strong.
Bitcoin’s Z-score for its 200DMA was around 2.5, which is still very high by historical standards and its highest since the start of 2020.
Dip-buying demand will continue
Hence, the risk of a short term pullback has increased. But bitcoin bulls shouldn’t worry too much.
This is because the core narrative that led to the spectacular rally from below $20,000 since mid-March is likely to remain a tailwind for the foreseeable future.
readers will remember three american banks went off earlier this month, sparking concerns about a wider global banking crisis and pushing merchants Back off aggressively on stakes when over-tightened from the US Federal Reserve.
As per expectation, Fed gave a dovish pivot In its rate guidance at its meeting this week (despite still raising interest rates by 25 bps), the bet with investors is now that a cut cycle will begin in the second half of the year.
combination of worry about financial crisis And the bet on easy monetary policy has given bitcoin a double whammy of safe-haven demand (as a fiat currency alternative) and demand for an asset performing well in a low-interest rate environment (which is typically bitcoin).
Bank contagion risks remain high and the US economic outlook has largely darkened, meaning these headwinds should remain strong.
Bitcoin is also likely to continue receiving long-term tailwinds from positive on-chain trends.
These include a steady but steady increase in daily transactions, wallet addresses with non-zero balances, rate of new address creation, and daily active wallets interacting with the blockchain.
Any dip in bitcoin price towards the $25,000 area could be met with aggressive dip buying demand.
Long term risks are tilted towards a push towards $30,000 in the coming weeks and months.
At least, that’s the message from the bitcoin options markets – 25% delta skew of bitcoin options expiring on 90 and 180-days is nearing its highest level since late 2021, when bitcoin hit an all-time high of over $69,000. level was reached.
