After a sudden rise that began almost two months ago, Bitcoin seems to have encountered its first effective strong resistance. Is there anything to worry about? The answer is NO. Let's clarify it immediately: when the price of an asset rises quickly and without stopping as happened to BTC/USD, a setback near a resistance zone is physiological. A retracement (and sometimes even a bit of lateralization) can serve to consolidate the price level just reached: a support can be retested to make it even stronger or some time can pass waiting for liquidation zones to accumulate above or below at the current level. Those who trade, in fact, are very attentive to the key levels of a chart and use them to open or close positions. Sometimes stop-losses are placed just below certain support levels or above the resistances (in the case of short trading), so that if the market were to go against the trader's strategy he does not lose all the capital. Traders, and Short Term Holders in general, represent an important part of today's reflection on the price of $BTC.
The BTC/USD chart with daily candlesticks shows us how, once it reached around $44,700, a lateralization lasting a few days was triggered. Following this there is a very wide red candlestick which denotes high selling pressure above this price level. The discharge, in fact, occurred in a short time and stopped near the support at $40,000, where there is a certain demand area. For now, therefore, the chart movement goes from $40200, current support, to 44k which represents the local high. A loss of support scenario would mean giving a bearish aftertaste to the movement and we would see the price drop to at least $38,500 before finding another demand zone. On the contrary, however, an attack on the local high could mean a restart in the price of Bitcoin.
Analyzing the movement that occurred under the microscope and positioning ourselves on an hourly time-frame, we notice something rather curious: the discharge is actually not just one but is divided into at least two distinct movements and with decreasing volumes. In these cases it is best to wait for the end of the movement and the subsequent onset of lateralization of the graph to evaluate what to do.
"The number of coins held 'in profit' by STHs, having a cost-basis lower than the current spot price."
An interesting food for thought is given to us by Glassnode who with a tweet reminds us that 2023 was a powerful year for Bitcoin but now it seems to have encountered resistance. In fact, from their analysis, an interesting fact emerges regarding STHs. These entities, i.e. those who trade, found themselves in enormous profit following the rise of the asset and wanted to close their positions at $45k. In fact, in about 10 months, we went from a loss of about 30% to a calculated profit of 20%.
Conclusions
I see two possible solutions to the movement of the past few days: either Bitcoin recovers the local high, which would only occur when demand returns, or it loses the $40k support and quickly drops to the next support. The third solution, the one that few consider, however seems to be the most probable: laterality. In fact, Bitcoin needs to breathe and consolidate the level it has reached. Large moves need to be made over an equally large period to give investors time to get used to the price level. In fact, they must perceive the $40,000 as a "right" price and not "too high" to be able to invest more capital.
Read also: How to Live on Crypto: Bitrefill
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