Bitcoin, the first decentralized digital currency (Bitcoin), is currently experiencing a slow downward trend. Last week, it tried to rise above $95K, a key price point called a resistance level, but it failed. Since then, sellers have been gaining control. The price is moving in an unpredictable way, and signals suggest there could be more challenges ahead.
Bitcoin’s Daily Price Movement
Looking at the daily chart, Bitcoin’s price is still stuck in a descending channel, which means its value is slowly moving downward within a clear range. Recently, it tried but failed to reach the top part of this channel near $95K. This area is also a significant “supply zone,” meaning there are many sellers waiting to sell their Bitcoin at these prices. After failing at this level, the price dropped further, with daily candles showing lower closing prices.
Two important moving averages (averages of past prices) for the last 100 days and 200 days are also above the current price and pointing downwards, which supports the idea of a downward trend. The Relative Strength Index (RSI), a tool that measures momentum, is also weak and stuck below 50. For Bitcoin’s price to recover, buyers need to not just reach $95K but push past it with strong trading activity. Otherwise, this could just be a temporary bounce in a larger downward trend called a “dead-cat bounce.” Additionally, if the current support level at $88K breaks, the next important support zone would likely appear around $80K.
Closer Look: The 4-Hour Chart
On a shorter time frame, like the 4-hour chart, Bitcoin recently bounced slightly from the lower edge of a pattern called an “ascending triangle.” However, this doesn’t look very convincing for a strong recovery. The triangle is tightening, meaning the price is moving less and less until a breakout might occur. So far, each price rise has gotten smaller and weaker.
There have been multiple rejections of Bitcoin’s price near the $95K level, showing strong resistance from sellers. If the price falls below $88K, the triangle pattern will break. This could cause the price to drop sharply to $84K or even $80K, where there is strong buyer interest (known as a “demand zone”). Right now, selling pressure has the upper hand, as the RSI on this chart also hasn’t risen above 50 to show signs of a recovery.
Insights From On-Chain Data
On-chain data refers to blockchain activity that provides insights into how Bitcoin holders are behaving. One useful tool here is the Adjusted SOPR (aSOPR). This indicator compares the price of coins being sold now to their purchase price. If the value is below 1, it means people are selling their coins for less than they paid – showing they are accepting losses.
Right now, aSOPR is heading lower and getting close to 1. Historically, whenever it fell below 1 during market corrections, it signaled something called “capitulation.” This means weaker investors, who may panic, sell their holdings and leave the market. This often marks a low point in the market, followed by a recovery.
If aSOPR falls below 1 sharply, many people might start panic-selling. However, this could actually create a chance for the price to rebound strongly later, especially if it happens near the strong support zone around $80K to $82K where buyers are active.
This situation leaves many wondering: what will happen to Bitcoin if the $90K support doesn’t hold strong?
Source: CryptoPotato