Bitcoin’s recent price action has spread fear throughout the cryptocurrency market as participants worry that the bull market may be over.
However, things can change very quickly in the crypto space, and the possibility of a recovery still exists.
Technical analysis
Author TradingRage
Daily chart
On the daily chart, the price has been making lower highs and lows since falling below $70k, showing a clear bearish trend.
Last week, the market even dropped below the key $60,000 level and the 200-day moving average, which is around the $58,000 mark.
Meanwhile, the $57K support level is holding the price back from falling any lower. So, if the price can quickly rise above the 200-day moving average, this recent drop could be considered a bear trap and a rally higher could be expected.
4 hour chart
The price action has been clearly bearish on the 4-hour time frame, with the market creating a bearish trendline that is still intact. However, with the recent bounce from $54K, the $57K level is currently being tested.
If the price breaks $57k upwards, a rally towards the bearish trendline can be expected in the short term. However, the overall bias remains bearish as long as BTC trades below this trendline.
Supply chain analysis
Author TradingRage
Bitcoin exchange reserve
Given the recent downward trend in Bitcoin price, many might assume that investors have lost hope that the cryptocurrency market bull market will continue. However, this may not be the case for all BTC holders.
This chart shows the Bitcoin exchange reserve metric, which measures the amount of BTC stored in exchange wallets. Typically, an increase indicates distribution, while a decrease is associated with accumulation behavior.
As can be seen, during the last phase of the recent price decline, the value of foreign exchange reserves increased.
However, the metric has fallen sharply in recent days, indicating that some investors are seeing a buying opportunity at this price and are buying and withdrawing coins from exchanges. If this trend continues, the supply and demand equation could shift in favor of a bullish move and the correction could end soon.
