Bitcoin (BTC) continued its tumultuous journey on Wednesday even as the highly anticipated halving event loomed. Despite this backdrop, recent trends revealed Bitcoin trading mostly sideways, steadfastly clinging to a closely monitored weekly support level of around $61,000.
Amidst this uncertainty, investors found themselves treading cautiously, navigating a maze of contradictory signals within the market. While some maintained a bearish outlook, predicting a potential downturn of approximately 30% from the recent all-time high of $73,375, others harboured a sense of optimism fueled by various fundamental and technical factors.
Notably, on Tuesday, renowned analyst StockmoneyLizards urged caution amidst bullish signals, highlighting the possibility of mid-term corrections for Bitcoin to the $50,000s, as seen on the Wykoff Distribution indicator.
Nonetheless, the analyst emphasized that the bull market remains intact, suggesting it’s merely taking a breather following a year-long upward trajectory.
Elsewhere, the founders of crypto analytics firm Glassnode operating under the pseudonym “Negentropic” expressed confidence in Bitcoin’s resilience. They observed Bitcoin’s rapid rebound from the critical support level of $58,000, with the Relative Strength Index (RSI) indicating a shift towards bullish momentum. However, they advised vigilance, warning that Bitcoin could still experience further declines.
“While optimism permeates the market with sights set on breaching $68k and beyond, caution remains paramount,” they wrote. “Any downward movement below $58k threatens to disrupt the ongoing bull market trend.”
That said, amidst these cautionary sentiments, crypto analytics firm Cryptoquant analysts highlighted data revealing a significant surge in Bitcoin withdrawals from exchanges.
“Bitcoin withdrawals from exchanges reached their highest level since Jan 2023, indicating a significant accumulation phase. Also, recent metrics show a cooled-off market post a 10% decline last week, suggesting potential for a price increase,” the firm tweeted on Wednesday.
The analyst further suggested that the withdrawal spike may be linked to preparations for the upcoming halving. Historically, increased withdrawal activity has been associated with a rise in holding behaviour, often preceding future price surges.
Furthermore, Burak Kesmec, an analyst at the firm, noted a reduction in leveraged trading, with open interest on derivatives exchanges dropping from $18 billion to $14.2 billion. He emphasized that this decline in leveraged positions follows a period of intense trading activity and could signify a temporary stabilization in the market.
Another analyst from the firm highlighted the Short-Term Holder Spent Output Profit Ratio (STH SOPR), indicating a buying opportunity as short-term holders began to sell off. Historically, price increases have followed this phase, suggesting potential for a bullish trend reversal.
Bitcoin was trading at $61,560 at press time, reflecting a 3.42% drop over the past 24 hours.
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