Given the technical and on-chain data, a possible near-term bounce is possible. However, in an uncertain macro environment, a strong price rally seems less likely.
Technical Analysis
Daily timeframe:
The downtrend in Bitcoin’s continues as we approach the bulls’ last stronghold. The daily chart shows that the price has been consolidating extensively over the previous year. We are currently moving down towards the lower band of this range, and there is a high chance that the price bounces and starts a short-term rally, also known as the “Dead Cat Bounce” scenario.
Additionally, the daily RSI suggests an oversold sentiment in the market and is currently trying to break above the 30% level. Technically speaking, as in February 2021, an accumulation phase is underway, leading to a short-term uptrend. However, there is the risk imposed by macro-level factors to consider, and if the price falls below the lower band, things could get very ugly.
4-hour timeframe:
On a 4-hour timeframe, the price has been rejected by the 50 MA and 100 MA multiple times. The rejection of the price by the significant declining trendline confirms this bearish momentum. To anticipate a bullish reversal, the price needs to break above these dynamic resistances. For now, the most probable scenario is a consolidation phase in the $30k to $40k range.
Onchian analysis:
The most telling on-chain metric that can map the current state of the market might be the MVRV – the ratio of the coin’s market capitalization to its realized capitalization, which indicates whether the price is overvalued or not.
Historically, values over ‘3.7’ pointed price top and values below ‘1’ indicated price bottom. Currently, the MVRV is 1.5 and the market’s momentum is not promising. Therefore, the probability of reaching an MVRV of 1 or lower is high in the mid-term. Unless a macro catalyst stimulates the demand side and price start to gain a moment, even as a short-term recovery, like early 2018.
