KuCoin Weekly Technical Overview: BTC Trend Reverses as Price Breaches Above $44,000 Resistance

2021/10/04 11:21:49

The cryptocurrency market has finally taken a shift to the upside as the world’s largest crypto asset has made a gigantic move. Crypto prices, especially Bitcoin (which was failing to hold at the support levels throughout the previous month), have taken a turn with the beginning of October.

Looking back at September, Bitcoin was one of the hardest-hit cryptos when the entire crypto market tanked. The extended drop in prices was bizarre because the price action went out of sync with some major fundamental indicators that pointed out bullishness in Bitcoin. Similar was the case with Ethereum and many top altcoins as well. However, a few coins did take support at higher levels, unlike BTC.

Although the plummets came in aggressively, the story on the higher timeframes remained the same – bullish. The crash was simply comprehended as a retracement to the uptrend. Based on the current moves shown by the market, it perhaps proves that the downturn did turn out to be a pullback of the major uptrend.

Bitcoin Price Update

As the Bitcoin market is maturing progressively, the volatility in prices is diminishing accordingly. As a consequence, unlike altcoins, the average percentage movement in BTC has decreased considerably.

Throughout the retracement phase, the levels $44,500 and $40,600 have been a couple of major points of interest for the buyers. However, basing it off on the push that came at the beginning of October, the $40,000 level presents itself as the market’s bottom. Of course, the short-term trend is not completely bullish, but the early signs do leave the recent low as its bottomed-out price.

Bitcoin Price Chart on the Daily Timeframe - Source: BTC/USDT

Interestingly, the Bitcoin market that typically hovers between 1-3% per day saw an impressive jump of over 9% in a single trading session. Analysts believe the massive leap occurred as an effect of high accumulation and extreme short-squeeze at levels around $42,000. And as a result of the same, BTC currently trades at $48,000 and thereabouts.

US Dollar Turns Bearish – Bitcoin Outperforms Gold

Of Late, the entire US Dollar group has been gaining strength week after week. This led the traditional currencies, Gold, Silver, Bitcoin, and all other assets pairs against USD, to go negative. But as the demand zones on the higher timeframes began to react strong, the USD took the opposite turn on the lower timeframes.

Both Bitcoin and Gold observed great recovery as US Dollar was being dumped. But the recovery in both assets, when observed with a correlation viewpoint, Bitcoin has evidently outshined the safe-haven - Gold.

Putting it into perspective, Bitcoin has clearly breached through the $44,500 level. Still, Gold has failed to break above its corresponding $1760 level, proving that BTC presented a higher level of bullishness during its recovery against Gold.

BTC Miners’ Dependency on China Fades Away, Data Suggests

It is a known fact that China has forever been the hotspot for mining Bitcoin. But the country imposing a crackdown on the usage of mining rigs had bought a massive plunge in the hashrate. This measure represents the combined computational energy of the network. The hashrate, which usually maintained over 150 EH/s, plunged in May 2021.

Consequently, the hashrate normalized at 100 EH/s after getting as low as 50 EH/s. Amusingly, the hashrate recently jumped to 177.5 EH/s despite China reiterating its ban and shutting down the majority of the mining pools around the country. The hashrate heading to its all-time highs despite China bringing a ban clearly shows that the miners are least affected by it.

Bitcoin TA: Onset of a New Trend

The price action of Bitcoin has been on a roller coaster ever since it has broken above the long-lasted consolidation in June-July. Although the uptrend continued after breaking through the $40,000 resistance, the buyers started to lose momentum every step of the way north.

After taking a higher low at $32,279 (orange-ray), the BTC market inched to $52,000 with quite some struggle with speed; And this price became the high as the sellers took over the market. Not only did the sellers plunge the prices significantly, but they entered with high velocity. The initial recovery came in aggressively at $44,000, but the sellers shot it back down, forming a lower high, as indicated by the downtrend dotted line.

Bitcoin Price Chart on the Daily Timeframe - Source: BTC/USDT

The sellers pushed the prices down to $40,000. But the question remained – is it a real lower low or simply a false breakout (on the higher timeframe)? And the answer lies in the outcome of the downtrend line is respected. But as the market touched the lower high point and strongly broke above the same, it concludes that no real lower low was formed.

The area between $38,000 and $42,000 was critical as it was in the range of the buyer's interest. The current outcome of bulls moving to the upside from their area of interest shows that the long-term buyers are back in action. If the resistance at $48,000 fails to react and the buyers keep up the same momentum going, it is highly probable for the prices to get back to their recent highs in the short term.

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