The trillion-dollar global crypto market is finally experiencing reliable bullishness for over a week or so. The illusion of the everlasting Bitcoin and altcoin bull run in early 2021 was put to an end with the major update from Tesla and the China crackdown. The maturing crypto market, whose prices are to an extent driven by the sentiment among the mainstream, took a negative impact as we were approaching halfway through the second quarter of 2021.
Bitcoin, despite the drawdown of almost 50% from the all-time highs, the price did succeed holding at major technical Support (demand) levels. And the consolidation at these levels kept the hopes of crypto investors alive – as the buyers showed signs of interest.
The price action of Bitcoin in the last couple of months has certainly been dull, though fundamental updates have stayed active throughout. The market that used to plummet or skyrocket significantly instantly based on the news is now reacting feebly.
Furthermore, altcoins are all together moving against their fundamentals recently. Despite major technology upgrades and updates in the protocols, the price remained unaffected and continued making lower high and lower low sequences.
Bitcoin Technical Analysis
Bitcoin (BTC) is currently trading slightly above $40,500, hitting $42,614 on August 1, 2021, the highest price recorded since May 20. This also represents over 42% gain from the recent dip below $30,000.
The current short-term bullish trend was solidified when the price successfully breached the 50-period MA and the 200-period MA on the 4-hour chart. BTC breached the 50-period MA at about $31,540 and the 200-period MA at about $33,140. Note that this is the first successful breach above the 200-period MA we’ve witnessed on the 4-hour chart since June. The current bullish momentum has been supported by increased volume in the past week. This is significantly attributed to the buying pressure by the whales, who are estimated to have bought over 100,000 BTC during the below $30,000 dip.
Representation of volume increase on the Bitcoin Price Chart | Source: BTC/USDT
As the short-term bullish trend continues, we expect support levels around these price points:
- S1 – $39,400: 0.236 Fibonacci level
- S2 – $37450: 0.382 Fibonacci level
- S3 – $35,882: 0.5 Fibonacci level
- S4 - $34,000: 0.618 Fibonacci level
Bitcoin’s support areas based on the Fibonacci levels | Source: BTC/USDT
On the upside, the continued short-term bullish trend could face resistance at these levels:
- R1 – $45,400
- R2 – $47,200
- R3 – $48,700
- R4 – $50,200
Bitcoin’s resistance areas based on the Fibonacci levels | Source: BTC/USDT
The longer-term BTC outlook is also bullish! Looking at the daily chart, BTC successfully breached the 50-day MA for the first time since October 2020. It is currently hovering just beneath the 100-day MA. A successful breach above it will confirm the renewed bullish trend. That means that in the long term, we can expect resistance at the price points:
- R1 – $46,700
- R2 – $50,900
- R3 – $57,000
- R4 – $64,600
50 and 100-period moving averages on the Bitcoin price chart | Source: BTC/USDT
Any downtrend will face support levels at $37,000 with $30,000 remaining the critical value.
The last successful breach above the 100-day was in May 2020, coinciding with the 50-day MA crossed above the 100-day MA. This resulted in the unprecedented sustained bullish trend of 2020, which saw BTC gain over 630% in 12 months. Should history repeat itself, we could witness BTC topping $100,000.
However, as witnessed in the latest $30,000 battle, the short-lived bearish trend mimicked the bearish sentiment in the capital markets. It coincided with the drop in the stock market sentiment in Europe and Asia. As a safe-haven asset, the longer-term BTC trend will closely be tied to the capital market performance along with the ongoing regulatory environment.
It is true in the financial markets that history repeats. However, it is important to understand that’s not always the case. And the current market situation in a state which could turn out to be unique in price action considering the significantly rapid fundamental updates and changes in the Bitcoin market.
The current trajectory with buyers making a strong push north indeed puts the ball in the buyer’s court. But it is critical to note that every strong push to the upside need not be followed by another move in the same direction. The retracement in Bitcoin is still in play – the bulls holding at the resistance could bring the price to a halt anytime soon in the subsequent trading days. If the buyers fail to display interest at these price levels, the market dropping to the Support at $36,000 is inevitable. Follow the KuCoin Blog for more interesting and amazing educational content.
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