Technical Analysis

Bitcoin is yet to make a decisive move in either direction, as the price has been trapped inside a very tight range for weeks. However, the consolidation period could be coming soon to an end, as it appears the market is going through a calm-before-the-storm scenario.

The Daily Chart

Overall, the daily timeframe does not appear promising for Bitcoin, as the price has been unable to break above the primary dynamic resistance levels, the 50-day and 100-day moving average lines. These resistances are currently around $20K and $21K, respectively.

Despite the recent break above the long-term bearish trendline, the market structure is considered bearish until the price breaks above both mentioned moving average lines and the $24K resistance level.

More patience is required to determine whether a bullish scenario will occur or if the $18K support level will finally collapse and pave the way for another crash toward the $15K area and even to lower targets.

The 4-Hour Chart

On the 4-hour timeframe, the $18K and $20K levels still hold, and the price continues to oscillate in this tight range amid the $19K range. However, some bullish signs finally popped following the recent bullish rebound from the $18K level.

The price seems to be creating a bullish flag pattern. If it plays out, this pattern indicates a potential bullish price leg towards the $20K resistance level, and a bullish breakout becomes probable.

On the other hand, if the price breaks below the lower boundary of the pattern to the downside, the flag pattern would obviously invalidate. The RSI indicator also shows values around 50%, indicating that the momentum is currently indecisive.

On-chain Analysis

Bitcoin Miner Reserve

Bitcoin’s gruesome downtrend has been applying extreme pressure on various market participants, and miners have been no exception.

Miners are one of the most critical participants in the Bitcoin ecosystem, as they validate and process transactions and provide the network’s security. They also hold a significant amount of Bitcoin, which they mine for future profit.

However, the recent price decline is making mining unprofitable for many miners, as they may not have access to cheap energy sources or solid financial and regulatory support. The building financial pressure often results in miners selling their Bitcoin to cover the operation costs. The recent downtrend validates this theory in the Miner Reserve metric.

This increased selling pressure could lead to increased selling pressure for the price in the short term and force more large entities to capitulate and sell their assets. This disastrous cycle could push the price much deeper than it already is.

In conclusion, the decline in the Miner Reserve metric should not be ignored in the coming months as it could decide the next direction of the crypto markets.

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