Just as Bitcoin began to show positive signs of recovery, fears of a new variant of COVID-19 dropped global stocks and spilled over into the crypto market.

While the short-term price action looks bearish, the technical and on-chain trends remain strong, suggesting that the bull market is likely to continue.

BTC / USDT daily chart | Source: TradingView

Technical analysis

Short-term technical indicators remain cautious, especially given the stock’s fall. Due to the high correlation, the short-term correction of the stock market should also have an impact on BTC. The main area of ​​support is currently between $ 53,000 and $ 50,000 – which is where the cops have to defend themselves.

The 4-hour chart is showing the first signs of a bullish divergence, which is a positive move in the short term. It is too early to name a local low for BTC, however, as we have to see how the stock market performs over the next week. Ideally, the benchmark cryptocurrency would hold the support line, which would be a positive signal for the bulls as this trend line connects the July low with the monthly pullback low.

BTC / USDT 4-hour chart | Source: TradingView

Given the uncertain near-term outlook for the stock and the risk of liquidating long positions, investors should expect a decline into the $ 53,000 to $ 50,000 zone.

However, this pullback remains an attractive buying opportunity for long-term (LTH) holders as BTC fundamentals remain the same. This is just a jarring between a bull market and the prices that are expected to rise as certainty returns.

On-chain analysis

Although the price is down 22% from its recent high of $ 69,000, the trend in on-chain indicators is still bullish. LTH and miners are not selling too much, which is a very bullish signal. The selling pressure has arisen from the liquidation of long positions and recently bought coins. This can be seen in the STH SOPR indicator as it has been below the 1 level for the past few days.

Even with increasing volatility and sharp declines, BTC balances on the exchanges continue to drop to multi-year lows, suggesting investors are buying dips.

When a bear market begins, long-term holders usually pump coins into the exchanges, causing reserves to grow rapidly. This is in stark contrast to the current context.

So this is clearly a healthy pullback, mainly to liquidate over-indebted positions before the next upward phase begins.

Source: CryptoQuant

Conclude

Short-term conditions remain cautious, largely due to external risks such as fears of a new variant of COVID-19 and a correction in global equity markets. BTC’s long-term trend remains bullish as the fundamentals and on-chain remain unchanged.

Accumulating BTC at the current $ 54.1,000 level and especially the $ 53,000-50,000 region could be beneficial as older coins and miners are not selling heavily.

It would be nice to see Bitcoin outperform stocks in the global risk environment, which we saw in September and October.

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SN_Nour

According to Cryptopotato

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