Is BTC in Danger of Plunging Below $40K in a Brutal Correction? (BTC Price Analysis)
After an extended period of consolidation near the critical $45K resistance level, the price of Bitcoin is showing some slight fluctuations, potentially forming a double-top pattern. The emergence of this pattern could indicate a significant downturn in the near term.
Technical Analysis
A close analysis of the daily chart reveals that Bitcoin has been consolidating near the crucial $45K resistance zone for an extended period. This price range aligns with the upper boundary of an ascending channel that has been forming over several months, leading to a period of sideways movement and price stabilization. However, the failure to reclaim the previous significant swing high at $44.6K suggests the presence of selling pressure around this important threshold.
There is a possibility that the price is forming a double-top pattern, and a break below the neckline of this pattern could signal a potential market downturn, with a target support level around $38K. However, it is likely that the market will continue its current consolidation pattern in the short term, fluctuating between the $38K to $45K range.
On the 4-hour chart, a detailed analysis shows Bitcoin’s price moving sideways within a crucial range between the 0.5 Fibonacci level at $40.5K and the resistance level at $45K, indicating a balance between buyers and sellers.
During this consolidation, the price has been following a sideways wedge pattern, oscillating between its upper and lower thresholds. Notably, the lower trendline of this wedge coincides with a key support level represented by the 0.5 Fibonacci retracement level, providing strong support.
Currently, the price is attempting to break above the upper boundary of the wedge. If successful, this breakout could lead to a renewed bullish movement. However, considering the current market sentiment and conditions, it is likely that the price will continue to consolidate, fluctuating between the significant support at $40K and the critical resistance at $45K.
On-chain Analysis
This chart displays the average amount of coins per transaction being sent to exchanges, with a 30-day moving average overlaid with Bitcoin’s price. Higher values of this metric indicate that investors are sending a larger amount of coins per transaction, suggesting increased selling pressure that could lead to future price declines.
Historically, a surge in this metric has been correlated with a subsequent cascade in prices, attributed to significant selling pressure from larger market participants. Recently, the indicator has shown an upswing, indicating that participants are sending larger amounts of BTC to exchanges, potentially for distribution purposes.
While the current distribution activity may be driven by profit realization, continuous surges in this metric to concerning levels could indicate substantial selling pressure from major market players, potentially resulting in a decline in prices.