Bitcoin Defends $20,000, But Is Another Drop Imminent? (BTC Price Analysis)

The Bitcoin bear market appears to be far from over as the price has fallen to the bulls’ last line of defense before another massive leg down. The short-term and even medium-term price action of Bitcoin can be determined over the next few days.

Technical analysis

Of: Edris

The daily chart

Looking at the daily chart, the latest downtrend was initiated after the price rejected from the static resistance level of $24K. Also, it was rejected from the 100-day moving average at the same price, acting as a dynamic resistance. A bearish breakout and consolidation below the 50-day moving average has signaled that the current drop is more likely to be a bearish reversal than just a short-term pullback.

Finally, the price climbed back to the $20K level and looks to be supported again. However, a potential bounce from this area is likely to be a bullish correction before another run lower. This is a likely scenario if the price fails to break the 50-day and 100-day moving averages around the $22k-$24K range to the upside.

The 4-hour chart

On the 4-hour time frame, the price has broken the smaller bearish flag formed at the lower limit of the larger flag to the downside. Consequently, it has fallen rapidly towards the $20K level. A bullish rebound is currently in play as the price has been supported at the aforementioned level. As of now, a retest of the $21K resistance level appears imminent.

Interestingly, the RSI moving average has formed a massive bullish divergence between the last two lows, pointing to a potential reversal from this area. However, no upside can be considered likely until the price convincingly breaks the $21K level to the upside.

The price action still suggests that the market structure is bearish. So the RSI signal may turn out to be false.

Onchain Analysis

Of Shayan

The market seems to be seeking direction, but the major players are standing still. After last week’s FOMC meeting, Bitcoin plunged below its “realized price”, a necessary threshold to defend. Meanwhile, the MVRV ratio has fallen below 1 again, and the bearish cycle seems far from over.

The MVRV ratio is a useful metric for evaluating market sentiment. It allows us to track Bitcoin’s price relative to its realized value. It is calculated by dividing the market value by the realized value.

Values ​​below 1 indicate that most market participants have an overall loss. Historically, bear market bottoms have been formed while MVRV had values ​​below 1 for an extended period of time.

However, during the current bear market, the MVRV ratio has not fallen significantly compared to previous scenarios, as it has not reached values ​​below 0.8. Furthermore, it may take longer for the market to bottom out, as the capitulation phase often takes several months to end.

The bottom line is that BTC probably hasn’t been able to find a bottom yet.