The danger is not over yet, despite BTC’s 6-week high

After being rejected by the medium-term downward trend line for several months, Bitcoin finally broke above this obstacle and is now trying to surpass the 100-day moving average line.

However, the momentum has not turned bullish yet, while BTC had formed a bearish reversal pattern in the lower time frames. For now, there are no signs of a trend reversal in price action.

Technical analysis

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The daily chart

Bitcoin has formed a bearish triangle pattern and found support at the lower bound near the $18K area until it recently broke above the triangle.

Generally, a breakout from the upper edge of a bearish triangle is considered a bullish signal for price. However, market conditions are slightly different now, with some significant near-term resistance levels.

The 100-day moving average of $20.8K is the main barrier for Bitcoin, as the price struggles to stay above this level after some failed attempts.

Optimism is likely to return to the market if the price exceeds this level. Nevertheless, there is a higher chance that Bitcoin will be rejected at this level and plunge based on the lower time frame price action.

The 4-hour chart

There is a clear imbalance between the $20.9K and $22.1K levels. The price has recently experienced an increase and has reached this region.

Usually, the market uses an imbalance to start its next expansion move. However, the price has formed a bearish reversal flag pattern and reached the upper threshold.

Meanwhile, a closer look at the recent price action reveals a Double Top reversal pattern formation. Furthermore, it is a bearish divergence between the price and the RSI indicator on the 4-hour time frame.

Putting all the above signs together, there are many bearish indications for the coming days for BTC. Therefore, a rejection at the $21K level resulting in a drop towards the $18K area would be the most likely scenario for Bitcoin in the short term.

Onchain Analysis

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Bitcoin Realized Cap – UTXO Age Band (%)

It has been almost a year since Bitcoin recorded its ATH in the middle of the $69K level and the beginning of the current bearish cycle. As mentioned above, the price action has not yet changed to a bullish reversal structure.

Meanwhile, various unstable periods have been caused by the pandemic, inflation and other tensions. As a result, uncertainty and doubt remain the dominant sentiment in financial markets.

The chart below illustrates a macro view of Bitcoin’s supply dynamics, based on the Realized Cap – UTXO Age Bands (%) metric, which represents groups of coins based on their lifespan and their share of the total realized cap.

The market is in a phase of heavy accumulation, with a steady increase in the number of coins moving over the past six months. This accumulation and HODLing behavior is expected in bearish phases, showing that many investors still believe in Bitcoin.

This calculation indicates that during this particular bear market, the accumulation momentum is higher than in previous bearish phases despite the recent significant price drop below $20K.

This suggests that Bitcoin is still considered a long-term valuable asset for many market participants, and the market will undergo a significant bullish run after finding a long-term bottom.