After the spectacular first half of 2023, the Bitcoin price has stagnated. According to experts, the crypto is particularly stuck between $29,000 and $31,500. There is reason to believe that the Bitcoin price will tend to either sideways or bearish in the near term. This thesis is based on three factors, two of which include technical analysis and the third the fundamentals. Here are the details…
Bitcoin resistance at $32,000
Charles Edwards, founder of Capriole Investments, recently published a market update in which he stated that Bitcoin failed to break the crucial resistance at $31,000-32,000. The report states that if some positive news does not translate into bullish price momentum, it could be a bearish signal on its own. Edwards used the following statements:
Bitcoin is trading at $32,000, the most important resistance on the chart. From the announcement of the Blackrock ETF to the legal victory of XRP and the presidential candidate Kennedy’s announcement today that he will support the US Dollar with Bitcoin; Despite a slew of positive news for the crypto industry in the past month, nothing has helped Bitcoin sustain its momentum above $31,000.
Will Bitcoin’s $29.5K support continue?
Bitcoin has not traded well below the $30,000 level for almost a month. However, lack of resistance below $29,500 is critical. Because it shows that a downside break from the current consolidation may lead to more declines. As crypto market commentator Colin Talks Crypto noted, the next major support levels for BTC/USD do not kick in until the $27,500 level. Not only is this level acting as support from the previous price action, but both the 200-week moving average (MA) and the 200-day MA have started converging just below it.
Over the past month, BTC/USD has remained in a tight consolidation range. Support for this range appears to be at $29,500. A daily close below the support could open the way for a downside move to $27,500. However, volumes are falling. This suggests that perhaps the recent downtrend may be less bearish than it seems. If volume spikes in the middle of another pullback, the bears could easily take control of the market.
#Bitcoin looks to have a fair chance of dropping to around $27.3k where there is a confluence of:
1. A strong support range of previous price action (orange rectangle)
2. Where the 200 weekly MA (pink) acts as support.
3. The 200 daily MA (blue) isn't far behind either.These… pic.twitter.com/nEd2p6tbjw
— Colin Talks Crypto (@ColinTCrypto) July 19, 2023
The foundations of the Bitcoin network have been shaken
The Capriole Investments report emphasizes that “price is only half the picture.” Because in this analysis, fundamental factors also come into play. Among the most worthy of consideration may be criteria related to questions such as:
- What happens with on-chain streams?
- How do investors allocate capital?
- How are the general market sentiment and macro environment affecting Bitcoin?
- Is network security increasing?
The Capriole Bitcoin Macro Index is an aggregated measurement of 40 key Bitcoin variables, including on-chain, macroeconomic and stock market metrics. All factors are combined in a single machine learning model. The report concludes:
The Macro Index stays in a relative value period (below zero) today and offers reasonable long-term value for its perennial investors. However, the Index has entered into contraction again. On-chain and macro fundamentals have entered a bearish trend after a 7-week recovery period that started at $26,000 in early June.
Bitcoin’s long-term bull thesis still holds
Despite this short-term bearish trend, there is little cause for concern in the long-term. The next halving is less than a year away, and the good news continues to come. Perhaps most importantly, the hash rate has increased by 50 percent in the last six months alone. This shows that the Bitcoin network is stronger than ever and continues to grow rapidly.
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