In this article we analyze the situation of Bitcoin and see what the technical indicators are signaling about the future price of BTC in USD.
After the latest dump that led BTC to register -7% in a single day, the outlook for the king of the crypto market seems to be less than reassuring.
However, some data tell us that uncertainty still reigns in the air and there are still chances for a bullish rally.
Let’s look at all the details together.
Summary
Bitcoin price analysis: two downside factors for the crypto price in USD
Last Thursday, Bitcoin recorded one of the largest daily declines of the entire 2023, losing 7.33% in 24 hours and seeing $2,100 evaporate from its price.
At the moment, the king of the crypto market scores around $26,000, with some technical indicators signaling the high probability of new declines to come.
Of these, the most iconic and also the most fundamental is that of the 200-day moving average, which shows us that Bitcoin has closed below it for the first time in more than five months.
Usually the upward or downward break of this indicator serves as a strong signal for the crypto’s future price action.
The last time we witnessed BTC close below the 200 daily SMA, in December 2021, there were several weeks of dumps, with the average acting as resistance for brief bullish moves.
However, when the indicator was broken to the upside with a daily close above 20,000 in January 2023, the bulls took over until July.
Looking at the current situation, unless BTC quickly regains the lost ground by establishing the last movement as a “fake,” we can easily imagine new declines for the crypto asset’s price.
On the derivatives market front, the indicators are no more positive than before.
On 17 August, the day of Bitcoin’s big dump, more than $386 million in long positions were liquidated among the futures trading venues of the Binance, Bybit, Okx, Huobi, BitMex, Deribit, CoinEX, and Bitfinex exchanges.
If we take as reference not only BTC but all other cryptocurrencies we can observe liquidations of about $1 billion, higher even than those recorded during the collapse of FTX in November 2022.
Open interest in digital gold has definitely shrunk since the last price slide, with the metric briefly falling from $10.53 billion to $8.38 billion, a difference of more than $2 billion in aggregate value.
This basically means that a lot of interest in managing highly speculative positions has waned after the latest burn taken by traders, who are most likely considering less risky investments.
Also very interesting to note is how since May 2022 the 10.5-11 billion open interest has acted as resistance for much of Bitcoin’s bullish excursions, which was promptly pushed back to those levels resulting in subsequent declines in the metric.
At the same time, the 6.5 billion level proved to be good support for prices, which began to rise each time the value was touched.
Even on the last occasion, after the BTC dump, the open interest was rejected strongly to the current $7.9 billion.
Since there is still room, we will most likely see Bitcoin fall in price for the next few weeks with a parallel decline in the total value of open positions in derivative markets.
The trend should sooner or later mark an upward break.
The time frame, however, may still be very long before this happens.
A look at the dominance of the king of the market and on-chain data
Despite the very delicate situation for Bitcoin, there is also some data that signal a positive environment for future prices of the cryptocurrency, which could likely remain below $25,000 until the end of 2023.
First, BTC dominance moved in an unusual way during last week’s price drop: usually when there are dumps of this type dominance tends to rise strongly.
This time we observed the exact opposite with the indicator losing 1% in a short time.
This means that altcoins have withstood the shock and that many investors are confident about movements in the coming months and have preferred to hold their positions.
Supporting this argument is also the matter of market volumes: even though the liquidations in the crypto markets were comparable to what happened during the FTX crash, we cannot say the same about the capital moved in these trials, which were about 7 times lower.
When the real money inflows arrive within the market, we may be able to decree with “certainty” the future direction of BTC prices.
Another positive factor for Bitcoin concerns a piece of on-chain data, namely that of the 7-day average of the network hash rate.
In fact, a few days ago we witnessed a new all-time high for this metric, which presents us with a positive context in the world of miners, who are increasingly increasing their share of computing power.
The more hashrate there is, the greater the security and stability of Bitcoin’s blockchain.
Moreover, a growth of this figure can be interpreted with a constant interest by certain players to grab a share of the network’s power, aware that this could bring excellent profits in the future.
Moreover, this morning the sum of all holders owning more than 1 BTC reached a new ATH according to Glassnode’s data, reaching a total of 1,015,299 addresses.
This figure, like the previous one regarding the hash rate, is also illustrating a situation that is far from negative for the virtual currency, in which real smart money is accumulating market share ahead of the next bull run without taking current dollar prices into too much consideration.
If you are a true Bitcoiner, what matters at the end of all is not the profits and losses you are recording, but the amount of coins you possess within your wallets.
Bitcoin price: are we more likely to see $20,000 or $30,000 first?
After analyzing the previous technical and on-chain indicators, we can try to draw conclusions about Bitcoin’s overall situation on the future price front.
The question of whether we will see $20,000 or $30,000 first is not easy to give a definite answer.
However, we can conclude on the fact that we will probably observe more declines in the short term.
In any case, we could easily hold well above $20,000, where there is a strong support area that converges near the January pump, where volumes and liquidity were far greater than current values.
Indicatively, given the performance of the crypto markets as a whole, we can say that even on the other side of the coin we won’t be seeing so easily $30,000 as the short-term price for Bitcoin.
What seems more feasible is that until the end of the year, prices will fluctuate between the two extremes, never breaking up or down unless very important events occur.
To stay on track, it will be important to monitor developments in the Chinese markets, where after the collapse of Evergrande there could be other cascading defaults, as well as the upcoming decisions of the US Federal Reserve regarding interest rates on government bonds.
Until the end of 2023 we should not expect major gains from Bitcoin and other cryptocurrencies, but from 2024 onward we can finally smile again as we did in 2021.
