Technical and on-chain signals show that BTC is ready to recover
Bitcoin’s volatility continues. After BTC fell below $ 46,000 on Monday, BTC rebounded strongly, hitting a high of $ 49,5,000.
Looking at the graph below, the center line (MA 20) of the Bollinger Band (BB) indicator has acted as support for upward trends and at the same time as resistance for gradual downward trends. Therefore, a breakout or breakage of this line can be viewed as a trend reversal signal.
After the bearish divergence was confirmed, Bitcoin price fell from the ATH ($ 69,000). Failure to break this MA on December 1st triggered a sharp sell-off that followed, falling to a low of $ 42.1,000. After several days of accumulation near the bottom line of the BB indicator, Bitcoin broke out above it today. This is a bullish signal that signals the end of the correction.
BTC / USDT daily chart | Source: TradingView
The 4-hour chart shows that BTC broke through a descending parallel channel and then confirmed it as support (blue symbol). This further confirms the idea that the correction is over and BTC will rise higher in the next few days.
BTC / USDT 4-hour chart | Source: TradingView
Although Bitcoin recorded a new ATH on November 10, 2021, the total number of active addresses is still well below the previous high of Q1-2021. This indicates that there is still little network activity. Hence, we need to see new capital flows being made by new investors and traders.
Historically, the Open Interest RSI (OI) hits the overbought zone when the price hits its high. A correction phase similar to open interest then begins for the price.
As you can see on the graph, we had an overheated futures market with high leverage positions. At the same time, BTC hit a new ATH of around USD 69,000.
After that, however, the price began to falter and the futures market began to cool. As a result, many long positions were liquidated during the transfer window.
Currently, the market is at a similar point to the last time BTC price started from $ 40,000 in late September. The net flow of the derivatives market is in negative territory and the RSI of the open interest suggests that the price may be recovering in the near future.
You can see the BTC price here.
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Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.