Bitcoin’s price has declined recently, making lower highs and lows and breaking through multiple support levels.
This comes following seemingly positive reports about US inflation, leaving some investors wondering why the market is dropping.
Technical Analysis
By TradingRage
The Daily Chart
On the daily chart, the price has been dropping since getting rejected from the $70K level and has also broken below the 200-day moving average, located around the $58K mark. Currently, the market is hovering around $57K.
However, the 200-day moving average has rejected the price, preventing it from recovering. Therefore, a drop toward the $52K level could be probable in the coming weeks.
The 4-Hour Chart
On the 4-hour chart, things become even clearer. The price has once again been rejected from the long-term bearish trendline. If the $57K support level is broken to the downside, a quick drop toward $52K will be more likely.
A further downtrend would be imminent, with the RSI dropping below 50%. On the other hand, this scenario would fail if the trendline gets broken to the upside.
On-Chain Analysis
By TradingRage
Bitcoin Miner Reserve
While technical analysis can be a decent tool for price action forecasting, it is also beneficial to look for the underlying reasons behind the recent downtrend. Analyzing the behavior of BTC miners could yield helpful insight into achieving this goal.
This chart presents the Bitcoin miner reserve metric, which measures the amount BTC miners hold in their wallets. Downtrends in this metric indicate that the miners are selling more Bitcoin than they are mining, which can be a bearish signal.
Over the recent months, the Miner Reserve metric has been dropping rapidly. This might indicate that they are not convinced of a further uptrend by Bitcoin. Consequently, this selling pressure could result in a further price decline.
