The value of Bitcoin entered a zone that has usually preceded a bullish price rally. The lows continue to move with an increasing trend, indicating a consolidation phase will occur.
Analyst TechDev stated that traders are currently accumulating Bitcoin (BTC) and that the profit-taking phase has ceased despite the dominant bearish sentiment. According to the expert, two metrics support the assessment that they hold their coins in their wallets.
Two indicators, called accumulation trend score (ATS) and entity-adjusted dormancy flow (EADF), allowed him to obtain those results. According to Glassnode, an ATS closer to one indicates that a large part of the traders is accumulating. On the other hand, a value closer to zero reveals that they are making a profit.
The analyst contrasted two successive price surges in three different regions of the Bitcoin price. They occur after a significant drop in the value and correspond to early January 2019, late June 2020, and January 2022.
A correction period where the price dropped and then leveled off precedes the 2019 and 2020 rectangles. The demarcated areas on the price curve coincide with a low on the second curve (the EADF). That curve refers to the days a currency remains unmoved/dormant, as buyers expect the price to rise or consider it a valuable asset.
The lows of the lower curve have historically marked the bottoms of the Bitcoin price range in a correction phase. It has also indicated the restart of an accumulation phase that allows triggering a bullish rally.
TechDev highlighted the third rectangle, which coincides with a low price in the period, suggesting the correction is ending now. In that way, he forecasts that the value of Bitcoin would bottom out before an imminent bullish rally. However, the EADF curve is still in the green zone with an upward trend, indicating that the bullish rally has not yet started.
The Price of Bitcoin Is at a Turning Point
The weekly chart highlights that the support line shows that the lows have a growing trend. The lowest price has gone from USD 35,000 to USD 37,000 and stands above USD 39,000.
A short-term historical trend does not guarantee that the upward momentum will remain. The lower curve of the Relative Strength Index (RSI), which indicates oversold and overbought conditions, is now forming a descending pennant pattern.
The above would indicate that a consolidation phase would occur before the price rebounds toward a new bullish stage. TechDev concludes that it is only a matter of time before the RSI curve reaches the lower support of the pennant again.
Renowned analyst Willy Woo thinks that spot demand would influence the price of Bitcoin. He explained that it has experienced a moderate rebound (only 10%) and is trading around USD 38,974.
Futures traders oscillate between the concepts of risk-on and risk-off in the selection of high-risk or low-risk assets. Data from Glassnode indicate that they influence 90% of price changes, depending on the market configuration. In that sense, it is still necessary to wait to see how that market behaves.
Bitcoin is trading at around USD 38,974 and has accumulated a 0.2% loss over the last 24 hours. Its trading value is above USD 32.46 billion, and its market capitalization is about USD 741.52 billion, according to CoinGecko.
By Alexander Salazar
