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Analysis of the price of Bitcoin: is the rise continuing or is it time to retrace?

Price analysis: Bitcoin in the last few days has been dancing around the region of historical highs, maintaining a clearly bullish overall outlook, without, however, taking a clear direction in terms of upward or downward movement.

There are those who, after a whopping 7 consecutive monthly green candles for Bitcoin, fear the arrival of a strong price contraction that could interrupt the “golden era” and hand the market over to the bears.

The situation, however, seems anything but clear: the inflows of ETFs on Wall Street and the data from the cryptographic derivative markets, in fact, indicate ample possibilities of a bullish continuation.

Where will Bitcoin go in the coming months? What does the price analysis indicate?

Let’s see all the details below.

Analysis of Bitcoin price: Josh Olszewicz predicts a short-term decline

While indecision reigns supreme in the short-term Bitcoin market, cryptocurrency analyst Josh Olszewicz supports his bearish thesis in the price analysis presented to the New York-based news journal Coindesk.

According to reports, after reaching the highs, the cryptocurrency chart has taken on the typical shape of the “ascending wedge” pattern, which usually resolves with a downward breakout.

The rising wedge typically signals a situation of loss of strength of an uptrend, with straight lines passing through lows and highs that intersect to start a retracement.

Bulls don’t seem to be able to push prices to higher highs compared to those marked in the previous breakout attempt around $73,700 and now the ball could be in the bears’ court

Olszewicz explained to Coindesk that based on technical analysis and probability studies, Bitcoin is heading towards a situation where it is more likely that prices will fall rather than return to seek new pumps.

These are his words:

“Normally rising wedges resolve bearishly”

A bearish break below the $71,500 level could support the trader’s thesis, with the trend likely to tilt even further with the loss of the psychological level of $70,000.

In this case, the first target will be $67,500, then dropping to $65,000 and beyond if the short sellers do not give up in the face of demand reaction.

Bitcoin price technical analysis
4h technical analysis of Bitcoin price (BTC/USD), Binance market

In the analysis of Bitcoin prices other indicators signal the imminent danger of a bearish reversal in the short term.

One of these is the 10-day rate of change, which measures how quickly prices are increasing or decreasing in the described period. 

In the case of Bitcoin, values have decoupled from the last bullish rally, showing a divergence that usually ends up generating a decrease in prices.

In this regard, similar situations that occurred during the bull market in 2017 and 2020-2021 have generated dips of 20% or more, offering profit opportunities to scalpers.

However, it should be noted that Olszewicz’s negativity is limited to a short time horizon: as already mentioned, the outlook remains largely bullish and any decline automatically becomes an opportunity to average down the average purchase price and load up on bags in anticipation of further increases.

The trader, referring to the rising wedge he was concerned about, added that:

“I think that even if prices were to retrace after a potential wedge breakout, it will be difficult for the bears to keep them under pressure for long”

Be careful not to panic and not to fall into FUD.

Analysis of derivative markets on BTC and capital flows of ETFs on Wall Street

Leaving aside the analysis of prices and focusing more on the data offered by derivative markets on Bitcoin, we can notice the presence of a positive sentiment that pushes for a bullish continuation of the crypto asset.

The open interest remains particularly high around 20 billion dollars, without showing signs of decreasing despite the price action of the last few hours which has seen a slight drop below 73,000 dollars.

Source: Coinalyze

Furthermore, by taking a look at the funding rate on Bitcoin, as well as on other cryptocurrencies in the market, we easily notice how traders are still interested in using financial leverage to speculate as much as possible in this magical moment.

On BTC the funding rate is around 0.04% (the financing rate paid by longs to shorts every 8 hours), while other coins have a sometimes higher rate of 0.1%.

A few days ago, even the interest rates of derivative markets on Bitcoin were higher by 0.1%, but following the price volatility, the values have been brought back to “healthy” levels, thus eliminating long over leveraged from the market.

In fact, there is still room for an acceleration of speculations.

Source: Coinglass

Another indicator of the potential resilience of bulls, which would contrast with the bearish theories indicated by analyst Olszewicz in the previous paragraph, concerns the data on flows on the spot ETFs of the Wall Street exchanges.

Indeed, even assuming negative implications on the technical analysis of prices, we must remember that US investment funds are scooping up all the satoshis available on the market, taking away many more BTC daily than are produced by mining.

While Grayscale continues to liquidate its positions, BlackRock, Fidelity, Bitwise, and Ark continue to add value to their exchange traded funds, with netflows yesterday exceeding 680 million dollars

On March 12th, the inflows even exceeded the billion dollar threshold, briefly pushing BTC towards new highs before experiencing a small correction.

If the situation were to remain unchanged with ETFs buying Bitcoin in every trading session, we could confirm the high probability of a bullish continuation with bulls absorbing every attempt of bears to push the asset down towards $100,000 in the coming months.

In this regard, eyes are focused on ETF flow data: a large outflow could trigger an extended retracement phase, with prices potentially falling back below $60,000

For the moment, however, the situation is still very positive.

Alessandro Adami
Alessandro Adami
Graduated in "Information, Media and Advertising", for over 4 years interested in the cryptocurrency and blockchain space. Co-Founder of Tokenparty, community active in spreading crypto-enthusiasm. Co-founder of Legal Hackers Civitanova marche. Information technology consultant. Ethereum Fan Boy and supporter of Chainlink oracles, strongly believes that smart contracts will be central in the development of society.