Bitcoin Faces Potential Fall to $25,000, Data Signals Bearish Trend
Bitcoin (BTC) has experienced volatile price action since late April, with significantt fluctuations in the value. At the time of writing, the cryptocurrency has experienced a 3% decline in the last 24 hours and is currently trading at $28,400. However, it has now settled within an accumulation range of $27,800 to $30,000.
Bitcoin Bulls Be careful
BaroVirtual from Cryptoquant recently shared his analysis regarding the potential downside targets for Bitcoin. According to the analyst, the bearish divergence of the BTC: On-Chain Summation Index suggests a target of approximately $27,200. A Head and Shoulders (H&S) pattern also indicates a lower target of $25,000.
The BTC on-Chain Summation Index is a metric that tracks the number of Bitcoins transferred on the blockchain. When the index shows a bearish divergence, it suggests a decrease in the amount of Bitcoin being transferred, which could lead to a price decline.
Similarly, Binance, one of the world’s largest cryptocurrency exchanges, received its largest single Bitcoin deposit this past week. The deposit, made to an address that had been inactive for four months, came from five separate addresses and amounted to over 1,200 BTC, worth over $35M at current market prices.
Arkham, a blockchain analytics firm that tracks cryptocurrency transactions, reported the news. The firm noted that the deposit was made in a single transaction and that the funds were sent to a previously unused deposit address. Will this lead to an extension of the bearish momentum? It remains to be seen.
Furthermore, according to Material Indicators, a crypto analysis firm, the recent monthly Bitcoin candlestick close/open has signaled a potential near-term price correction for the cryptocurrency. The firm’s Trend Precognition A2+ algo flashed a brief signal, indicating a potential decline in Bitcoin’s price, as shown in the chart below.
However, according to Material Indicators, the signal is provisional until the candle closes, and a pump above the April high could invalidate it. In addition, Wednesday’s upcoming US Federal Open Market Committee (FOMC) Federal Reserve interest rate decision could catalyze a significant price movement in either direction.
If the Federal Reserve raises interest rates by 25 basis points, that could lead to a stronger US dollar and put downward pressure on Bitcoin’s price. However, continuing to pause or maintain current rates could increase investor confidence and lead to a price increase for the cryptocurrency.
Although the potential downside targets are predicted for BTC, evidence suggests that the $27,000 mark could support the cryptocurrency and push the bears back. This level has already shown its resilience as a support floor, holding up well against significant selling pressure since April 21.
Featured image from Unsplash, chart from TradingView.com
