- BTC is now down by a total of 5.45% over the past week as it sits beneath $48,000
- The cryptocurrency is currently trading inside an ascending wedge formation
- Bearish divergence with the RSI might be suggesting a breakdown is possible
|Key BTC resistance levels||$47,820, $49,325, $50,000, $50,660, $52,000|
|Key BTC support levels||$46,000, $45,516, $44,000, $42,456, $42,000|
*Price at the time of publication
The bull run for Bitcoin seems to have slowed down a bit since hitting the resistance at $50,000 last week. The cryptocurrency attempted to break $50,000 last Monday but failed to hold above the level and ended up heading lower during the week.
It is now trading inside an ascending wedge formation as the buyers attempt to defend the lower boundary of the wedge. However, the bearish divergence between the price and the daily RSI seems to suggest a retracement is imminent, which is likely to send BTC beneath the ascending wedge pattern and push it lower toward the next support, which is at $46,000 – provided by the 200-day MA level.
The bearish divergence is quite significant because it is the biggest selling signal for the momentum within the market. The divergence has been present throughout the majority of August and seems to be getting stronger – indicating the rollover is imminent.
Despite the bearish technical outlook, there are some positive fundamental drivers that might be suggesting a break above $50,000 is on the table. According to data from Glassnode, the BTC HODLer Net Position reached a new one-month high
? #Bitcoin $BTC HODLer Net Position Change just reached a 1-month high of 24,906.171
View metric:https://t.co/CU3jPaaHXh pic.twitter.com/Ck2hBKfMd5— glassnode alerts (@glassnodealerts) August 28, 2021
Interestingly, further data shows that long-term holders continue to have diamond hands. Data from Glassnode shows that the amount of supply that was last active over 10-years ago reached a new ATH of around 2.3 million BTC – worth around $112 billion.
? #Bitcoin $BTC Amount of Supply Last Active > 10y just reached an ATH of 2,300,284.993 BTC
View metric:https://t.co/lBBwEqVviB pic.twitter.com/bm2BbjTUWh— glassnode alerts (@glassnodealerts) August 27, 2021
Another major bullish driving force is the fact that the Federal Reserve continues to print money. The Coronavirus pandemic caused the Federal Reserve (and other governments around the world) to print more money in the last year.
As a result, the economy experienced high levels of inflation which caused institutions to look for a hedge against it. Some smart institutions chose BTC as their hedge for inflation as they began purchasing BTC at unprecedented rates. The BTC buying caused the price for the asset to surge to the $60k ATH we saw this year as institutions managed to buy up around 1.6 million BTC – taking up around 8% of the entire BTC supply.
More recently, the Federal Reserve Chairman Jerome Powell stated a further pro-inflation policy outlook at the recent Jackson Hole symposium. They will continue with their $120 billion monthly asset purchase program and continue to hold near-zero interest rates – both great bullish factors for BTC.
Nevertheless, the main obstacle for BTC this week remains the $50,000 threshold. Interestingly, the Bitcoin Law will pass on September 7th in El Salvador, and many are expecting this to provide a strong enough bullish push to drive BTC beyond $50K. El Salvador made Bitcoin legal tender in the hopes of saving $400 million in remittance commissions for the country. However, it seems that are some that are protesting about the Bitcoin law as they worry about the constantly fluctuating prices.
BTC now holds a total market cap value of around $896 billion.
Let us take a quick look at the markets and see where we might be heading.
Bitcoin price analysis
What has been going on?
Taking a look at the daily chart above, we can clearly see the wedge that BTC is currently consolidating in. The coin surged higher from $37,500 at the start of August as it started its surge higher. Last week, BTC met resistance at $49,400 (1.272 Fib Extension) and started to stall.
It did manage to spike above $50,000 last Monday but failed to close a daily closing candle beyond the $49,400 resistance level. As a result, BTC started to roll over throughout the week to find support at the lower angle of the ascending price channel, where it currently sits.
As mentioned, there is a strong bearish divergence between price action and the daily RSI. While the price of BTC has been climbing higher throughout August, the RSI has been making lower highs. This indicates that there might be an imminent retracement within the market which could see BTC heading to the 200-day MA level at around $46,000.
Bitcoin price short-term prediction: Bullish
The recent price hike over the past three weeks has now turned BTC bullish in the short term. BTC would now have to drop beneath the August support at $37,500 to turn neutral in the short term and would need to continue further beneath $31,500 to be in danger of turning bearish.
Looking ahead, if the bears do break the lower angle of the current wedge, the first support is expected at $46,000 (200-day MA). This is followed by added support at $45,520 (.382 Fib Retracement), $44,000 (.5 Fib Retracement), $42,456 (.618 Fib Retracement), and $40,000.
Where is the resistance toward the upside?
On the other side, the first strong resistance lies at $49,400 (1.272 Fib Extension – blue), which stalled the market last week. This is followed by resistance at $50,000, $50,660, $52,000, and $53,000 (bearish .786 Fib Retracement).
If the buyers continue to drive beyond $53,000, additional resistance then lies at $54,140 (1.272 Fib Extension), $56,000 (bearish .886 Fib Retracement), and $58,000.