Bitcoin Price Aanlysis: Key Technical indicators to watch

Key Technical indicators to watch

In our previous analysis, we observed that both the major support and resistance levels remain operative. Presently, Bitcoin is in a consolidation phase in the short term.

Taking a look at the 4-hour chart, we can note that Bitcoin has been on a downward trajectory since its peak at $31,000. The 55-period moving average constitutes a key resistance level, currently pegged at $27,042.

Source: Tradingview

Turning our focus to the daily chart, we find that the 89-period moving average stands as the principal support level, situated currently at $26,780. 

Impending Altcoin Season

The BTC dominance chart presents an intriguing scenario – it appears to be forming a diamond top pattern. This pattern typically indicates an imminent, significant downtrend. In layman’s terms, we can infer that altcoins, especially those paired with Bitcoin like ADA/BTC and LINK/BTC, may outperform Bitcoin in the near future.

Source: Tradingview

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Bitcoin Price Analysis: Navigating Between Key Support and Resistance Levels

Bitcoin has just breached the 27,000 level, currently portraying a considerably weak trend.

The 89-day moving average serves as a crucial support level, warranting close monitoring. On March 10, Bitcoin dropped to the 89-day moving average, triggering a rebound exceeding 50%. Last Friday, following a dip below the 89-day moving average, Bitcoin promptly initiated a rebound, peaking at 27,650. Currently, Bitcoin continues to consolidate above the vicinity of the 89-day moving average. A significant breakdown below the 89-day moving average without a subsequent recovery may potentially ignite a new round of substantial decline.

From the 4-hour chart perspective, Bitcoin is navigating a downtrend channel. Post-rebound, Bitcoin failed to breach the recent high of 28,290, indicating the downward trend remains unbroken. 

As per the 4-hour chart, the recent rebound also exhibits factors of RSI and MACD bullish divergence. Currently, the 55-period line on the 4-hour chart is a conspicuous resistance level. Bitcoin needs to surpass this 55-period line on the 4-hour timeframe to possibly initiate a further upward surge.

Prior to the emergence of a clear direction, Bitcoin may continue to consolidate within the box defined by the 89-day moving average support line and the 55-period resistance line on the 4-hour chart.

Please note that the data and indicators mentioned are based on the Bitcoin price chart from Binance.

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Grayscale CEO challenges SEC’s denial of application

Michael Sonnenshein, CEO of Grayscale Investments, stated in a recent interview that he “can’t imagine” why the United States Securities and Exchange Commission (SEC) “wouldn’t want” to protect Grayscale investors and return the true asset value to them. Sonnenshein made this statement in response to a question regarding why the SEC “wouldn’t want” to protect Grayscale investors.

Sonnenshein explained that the SEC “violated the administrative procedures act” by denying approval for the Grayscale Bitcoin Trust (GBTC) to be a spot Bitcoin (BTC) exchange-traded fund (ETF), in June 2022, during an interview that took place on February 25 on What Bitcoin Did, a popular podcast that is hosted by Peter McCormack. The podcast is called What Bitcoin Did.

He stated that this act ensures that the regulator does not show “favoritism” or act “arbitrarily,” adding that the SEC acted “arbitrarily” by approving Bitcoin Futures ETFs while rejecting “GBTC’s conversion.” He explained that this act ensures that the regulator does not show “favoritism” or act “arbitrarily.”

Grayscale Investments saw the SEC’s approval of the first Bitcoin exchange-traded funds (ETFs) as “a indication” that the SEC was “changing its approach about Bitcoin,” according to Sonnenshein’s observation.

He stated that there is a “couple billion dollars” of capital that would immediately go back into investors’ pockets, on a “overnight basis,” if GBTC was approved as a spot Bitcoin ETF, and that this capital would “bleed back” up to the fund’s net asset value. He said this would occur if the fund was approved as a spot Bitcoin ETF (NAV).

Sonnenshein noted that this is because GBTC is now trading at a discount to its NAV. However, if it were to convert to an ETF, there would “no longer” be a discount or a premium; instead, there would be a “arbitraged mechanism” incorporated in the product.

He reaffirmed that Grayscale is now “suing the SEC now,” and that the company may have a ruling appealing the SEC’s rejection of its original application as early as “fall 2023.”

In addition to this, he said that Grayscale has more than “a million investor accounts,” and that investors from all around the globe trust on the company to “do the right thing for them.”

Sonnenshein “can’t fathom” a scenario in which the SEC would have no interest in “protecting investors” or “returning that value” to those investors.

He continued by saying that Grayscale isn’t going “to shy” away from the fact that it has a “commercial interest” in this approval, noting that if the application to challenge the SEC is denied, Grayscale may be able to appeal the case to the United States Supreme Court. He said that Grayscale isn’t going “to shy” away from the fact that it has a “commercial interest” in this approval.

This comes as a result of the Securities and Exchange Commission (SEC) filing a 73-page brief with the United States Court of Appeals for the District of Columbia in December 2022, outlining its reasons for denying Grayscale’s request to convert its $12 billion Bitcoin Trust into a spot-based Bitcoin ETF in June 2022. The brief was submitted in response to Grayscale’s request to convert its Bitcoin Trust into a spot-based Bitcoin ETF.

The conclusions that Grayscale’s approach did not adequately safeguard against fraud and manipulation were the primary considerations that led to the SEC’s determination.

The regulator has arrived at a same conclusion in a number of past applications for the creation of spot-based Bitcoin ETFs.

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Block’s Cash App Bitcoin Revenue Falls 7%

The Cash App business section of Jack Dorsey’s payment startup, Block Inc., reported Bitcoin (BTC) revenue of $1.83 billion in the fourth quarter, which is a 7% decrease from the same period last year.

Block attributed the reduction in Bitcoin income to the decline in the price of BTC during the year, which was reported in its quarterly and full-year results on February 23. Bitcoin’s price dropped by nearly 65 percent throughout the course of 2022.

Due to the decrease in sales, Cash App’s Bitcoin gross profit decreased by 25% year-on-year, coming in at $35 million for the quarter. This was the lowest quarterly total since the company began reporting Bitcoin earnings.

Block’s Cash App is an application for processing payments made using mobile phones. On October 25th, functionality for transactions made via the Bitcoin Lightning Network was enabled to Cash App. It does this by offering Bitcoin sales to its consumers via the app, which brings in money.

In the entire year of 2022, Cash App made $7.11 billion in Bitcoin revenue and $156 million in Bitcoin gross profit, representing decreases of 29% and 28%, respectively, when compared to 2021’s figures.

In the meanwhile, Block Inc. reported a significantly increased net loss for the quarter, coming in at $114 million. This is compared to a loss of $77 million in 2021. When compared to the same period of the previous year, its adjusted profits before interest, tax, depreciation, and amortization (EBITDA) rose to $281 million, or a 53% rise. The aggregate amount of revenue during the period was $4.65 billion.

Following the release of the results report, the after-hours trading of Block’s shares resulted in a significant price increase.

The increase in the company’s gross profit, which was up 40% in Q4 compared to the same period the previous year and also above expert estimates, has been ascribed by some analysts to the surge in revenue.

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Bitcoin Flips Visa Again

Since the beginning of the year, the price of Bitcoin (BTC) has increased by 48%, which has caused its market valuation to once again surpass that of the payment processing behemoth Visa.

According to CoinMarketCap, with the price of Bitcoin sitting at $24,365 at the moment, its market size of $470.16 billion is now only slightly more than that of Visa, which has a market cap of $469.87 billion at the moment.

Companies Market Cap reports that this is the third time Bitcoin has “flipped” Visa’s market cap, meaning that Bitcoin’s value has exceeded Visa’s value.

The first occasion was in late December 2020, coincidentally coinciding with the first time that BTC reached $25,000 in value.

This was accomplished during a price rise that saw BTC climb from $10,200 in September 2020 to $63,170 seven months later in April 2021. The price increase lasted for seven months.

BTC was able to take the lead over Visa for a very short period of time on October 1 before the payments business was able to reclaim their position as the market leader. Visa regained the lead between June and October 2022.

This advantage was further extended when, between November 6 and 10, 2022, the failure of the cryptocurrency exchange FTX took off more than $100 billion from the value of BTC in only four days.

However, since that time, BTC has had a complete recovery and has added an extra $65 billion to its market valuation of $408 billion as of November 6. This has allowed it to surpass the payment processing behemoth.

Because of the relatively tiny gap in their respective market caps, Bitcoin and Visa are now trading places on an hourly basis, which is something that should be taken into consideration.

Regarding the remarkable beginning that Bitcoin had in 2023, its third “flipping” of Visa occurred on the heels of a run of 14 days in a row during which the price increased. This run lasted from January 4 through January 17.

According to Google Finance, the market capitalization of Mastercard, the world’s second-largest payment processing network, is now $345.24 billion. BTC, on the other hand, has a significant lead over Mastercard.

However, Bitcoin is still trading at a discount of 63% compared to its all-time high of $69,044 that it hit on November 10th, 2021.

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Bitcoin’s Average Block Size Hits All-Time Highs

Because to the introduction of the nonfungible tokens (NFTs) protocol Ordinals in January 2023, the average size of a Bitcoin block has surpassed 2.5 megabytes (MB) for the first time since the cryptocurrency’s foundation in 2009. This marks a new all-time high for the cryptocurrency.

According to statistics obtained from Blockchain.com, the size of Bitcoin blocks increased by more than 2 MB in the weeks after the debut of the Ordinals Protocol. This surge in block size can be traced back to the beginning of February 2023.

Software developer Casey Rodarmor introduced the Ordinals protocol in the month of January. This protocol makes it possible for users of the Bitcoin network to create “digital artifacts.” These may include JPEG photographs, PDF documents, as well as audio and video files.

In the documentation for Ordinals, Rodarmor explains that each of these digital objects may be inscribed to a single satoshi, which is one of the component parts of a Bitcoin. The value of one bitcoin is equal to 100,000,000 satoshis.

Individual satoshis have the ability to be imprinted with any kind of data, allowing for the creation of one-of-a-kind digital artifacts that are original to Bitcoin. These artifacts may be stored in bitcoin wallets and moved via bitcoin transactions. The permanence, immutability, security, and decentralization of inscriptions are on par with those of Bitcoin itself.

The Bitcoin community is split on the issue of whether or not it should be possible to engrave digital items into the blockchain, and the reasons both for and against the proposal provide plenty of material for reflection. The greater use of block space for the inscription of several Ordinals has emerged as one of the primary topics of discussion.

Since July 2021 and continuing until February 2023, the typical size of a Bitcoin block has ranged between 0.7 and 1.5 megabytes. The average size of a Bitcoin block topped 2 megabytes for the first time on February 5, and it is now hovering at around 2.2 megabytes at the time of this writing.

According to statistics obtained by Glassnode, the introduction of Bitcoin Ordinals has also resulted in the network reaching a new high of 44 million non-zero addresses.

The most recent issue of Glassnode’s newsletter mentions that Ordinals compete for block space demand despite the fact that they have not yet materially influenced network pricing.

The introduction of Ordinals was referred to as a “new and unique point in the history of Bitcoin” by Glassnode. This is because innovation may promote network activity even without the “classical transfer of currency volume for monetary objectives.”

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WisdomTree cryptocurrency funds lose value in fourth quarter

As a result of the protracted bear market in Bitcoin (BTC) and other cryptocurrencies, the value of the digital asset assets managed by WisdomTree, a fund management company based in the United States, fell by a significant amount during the fourth quarter.

The cryptocurrency funds managed by WisdomTree had a total asset value of $136 million as of the end of the year 2022, which was down from $163 million at the beginning of the quarter and represented a depreciation of $23 million, the company disclosed in its quarterly earnings report on February 3, 2023. During the period under review, there was a total of just $4 million worth of redemptions or outflows from the funds. In the previous year, the cryptocurrency portfolios managed by WisdomTree contained a total value of assets equal to $357 million.

Although the fund manager’s operational revenues grew to $73.31 million in the fourth quarter, the manager reported a net loss of $28.3 million for the period. It was the eleventh consecutive quarter in which positive inflows were recorded, and net flows came in at $5.3 billion.

The loss in WisdomTree’s cryptocurrency portfolio of over 62% year-over-year is comparable with the decline in the larger cryptocurrency market during the same time period. According to CoinMarketCap, the overall market value of cryptocurrencies reached more than $2.2 trillion by the end of 2021. However, this figure dropped to about $795 billion the following year.

During the second quarter of 2022, WisdomTree’s portfolio saw a loss of $235 million, which was the company’s largest cryptocurrency loss to date. The crypto markets were in a state of disarray at the time because of the failure of Terra Luna and the knock-on consequences it had on other firms, including as the hedge fund Three Arrows Capital and the cryptocurrency lender Celsius, both of which declared bankruptcy in July.

WisdomTree has a number of funds that are focused on blockchain technology and allow investors access to the digital asset market via the use of conventional financial infrastructure. In December, the United States Securities and Exchange Commission gave WisdomTree the go-ahead to list nine new blockchain-enabled funds on its platform. However, the securities regulator has repeatedly shot down proposals to create an exchange-traded fund that would invest in spot Bitcoin transactions.

According to the cryptocurrency financial services platform Matrixport, institutional investors have been stepping up to purchase the drop despite the recent pessimism that has been surrounding crypto assets. According to the data given by the company, it seems that institutional investors residing in the United States have been responsible for the majority of Bitcoin purchases in recent months.

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On-chain data is signaling a “generational buying opportunity”

After the surge that we’ve seen this year, several on-chain measures from the Bitcoin (BTC) network are indicating that now is the time to purchase.

Bitcoin has emerged from its slumber to post a gain of 37% since the beginning of 2023, breaking out of its previous slump.

However, according to experts, on-chain data is still indicating it might be a “generational buying opportunity.”

On January 24, 2019, a researcher and technical analyst by the name of “Game of Trades” found six on-chain measures for the 71,000 people who follow him on Twitter.

The first measure is an accumulation trend score, and its purpose is to identify pockets of significant accumulation in terms of both the size of the organisation and the total amount of coins purchased.

The market analyst made the observation that “large entities have been in deep accumulation mode ever since the FTX collapse,” and went on to say that “similar accumulation took happened in the 2018 and 2020 bottoms.”

Six on-chain data pointing to a potentially generational and long-term purchasing opportunity for bitcoin

A thread called Game of Trades (@GameofTrades_), which may be found here. The 23rd of January, 2023 The ratio of the current market capitalization to the annualised dormancy value is the measurement that is used to determine the Bitcoin entity-adjusted dormancy flow.

When the dormant value surpasses the market capitalization, the market is said to have fully capitulated, which in the past has been a favourable purchasing zone.

Glassnode reports that in 2022, this measure reached an all-time low, making it the lowest point it has ever been.

The level of confidence that long-term Bitcoin holders have in relation to the price of Bitcoin may be measured using Bitcoin’s reserve risk.

According to the statistics provided by Glassnode, this dropped to its all-time lowest level by the end of 2022.

The Realized Price (RP) of Bitcoin is the worth of all coins in circulation at the price at which they were last traded. This is an estimate of what the whole market paid for their coins.

Since the fall of FTX in November till the 13th of January, Woo Charts indicate that Bitcoin has been trading at a price that is lower than this level.

At this moment, it is located slightly over the RP, which gives even another possibility for buyers.

The Bitcoin MVRV Z-score indicates if BTC is highly overvalued or undervalued in comparison to its “fair value” or the price it has actually been traded for.

It is common practise to consider the bear market to be over when the indicator no longer falls under the highly undervalued zone.

Last but not least, there is something called the Puell Multiple, which investigates the fundamentals of mining profitability and its influence on market cycles.

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Bitcoin’s Winning Streak Finally Comes to an End

Following the formation of the cryptocurrency’s first red candle on January 18, the two-week winning run that Bitcoin (BTC) had been on has finally come to an end.

The previous day, it seemed as if Bitcoin might equal or possibly break its record set in November 2013 of 15 straight days of positive price movement. This would have been the longest stretch of its kind in its entire existence.

In spite of the fact that the record wasn’t broken, Bitcoin managed to register the longest victory streak since the 2013 record in a run-up that some Twitter critics have described as “crazy.” Bitcoin is denoted by #. One bearish daily candle does not cancel out two weeks of all green candles being bullish.

the 18th of January, 2023 — IncomeSharks (@IncomeSharks) The primary reason for the negative price action appeared to be an ominous announcement made earlier on January 18 by the United States Department of Justice (DOJ), which stated that it would “announce an international cryptocurrency enforcement action.” [Citizens] should be aware that the DOJ has the authority to take legal action against anyone who engages in illegal activity related to cryptocurrencies.

However, it turned out that the action was taken against a rather obscure cryptocurrency exchange called Bitzlato that was situated in Hong Kong and had connections to Russia. Many people had assumed that it may be against a prominent cryptocurrency exchange or organisation.

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Bitcoin (BTC) $ 27,201.29 1.50%
Ethereum (ETH) $ 1,905.86 2.17%
Litecoin (LTC) $ 94.70 0.24%
Bitcoin Cash (BCH) $ 114.59 0.96%