BTC expected to consolidate after losing $40,000

While key static and dynamic supports failed to keep BTC low on the daily timeframe, selling pressure from long-term holders (cash inflows into all exchanges) eased after the price broke the $39,000 support. A period of consolidation in the $36k to $40k range is most expected in the medium term.

Technical Analysis

Long term

Bitcoin has lost its strong support over the past few days and hopes for a recovery are gone. BTC is currently trading below $40,000 and the 50-day SMA, both key levels broke during the recent decline. The next key level to watch is the $36,000 zone.

Where could BTC help rally towards the $40,000 resistance and the 50-day SMA.

BTC/USDT daily chart | Source: TradingView

In the short term

The downside momentum looks overwhelming on the 4-hour period as the price dipped slightly below the support. However, it is currently trading within the key Fib retracement range (between 50% and 78.6%), which is likely to halt the near-term downside. Therefore, a period of consolidation is expected over the next few days as bulls and bears clash between the $36,000 and $40,000 levels.

BTC/USDT 4 hour chart | Source: TradingView

Onchain analysis

In the chart below, the money flowing into all exchanges is divided into different groups. What’s interesting is that every time the 6-12 month cash flow increases sharply, the market gets shaken up. This structure can be understood as the distribution of long/intermediate holders through rallies.

On the other hand, short-term investors panic-sold during the bearish phase. When examining the behavior of short-term holders (< 3 months), most of the money entering the exchange comes from 1-day to 1-month holders, also known as “retail traders”. After selling pressure dipped below $39,000, selling pressure from long-term holders is easing and has mainly turned to accumulation.

Source: CryptoQuant

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

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