Warning: The conclusions of the following analysis are the sole opinions of the author and should not be taken as investment advice.
Bitcoin Dominance had bottomed out at 39.5% in January and slowly rose. This indicated that the flow of capital was directed towards Bitcoin and away from altcoins. Additionally, USDT (Tether) Dominance also fell from 4.87% last week to 4.28% at press time, suggesting that market participants were starting to deploy their capital into crypto assets after sitting on the sidelines with Tether. A recent Bitcoin report noted that a period of heightened volatility may be imminent. What can we expect from the king of the crypto sphere on the price charts?
Bitcoin’s downtrend started when the $59.1k level was broken and tested as resistance, and this downtrend seemed to last until early February. However, in early February, Bitcoin hit $45.8,000, a local high.
Basically, this mark was above BTC’s most recent downtrend lower high at $44.6,000. At the same time, the price also recorded higher lows. This meant, at the very least, that the downtrend had stopped.
The $45.8,000 area represents a strong supply zone, and down to $52,000 the chart is full of areas where sellers should be strong. Therefore, while a longer-term bearish bias weakened significantly, the bulls were not in the driver’s seat either.
The indicators painted much the same picture for Bitcoin. The RSI had crossed the neutral 50 line, after almost a month of struggle. The MACD also formed a bullish crossover and climbed above the zero line. Both of these indicators showed that the bulls’ grip on the market had weakened, but not necessarily that the bullish momentum was strong.
The OBV went further by pointing out that, despite a break in the market structure, buyer demand was simply not strong enough. The OBV has been on a downtrend since November and has climbed somewhat since January (higher lows). However, this development was probably not enough to trigger a new upward movement.
Bitcoin price appeared to be consolidating, as buyers and sellers fought fiercely on every significant horizontal level. The $44,000-$45,000 area was a strong resistance band, with $48,000 also as a resistance level. To the south, the $38,000 level and the $35,000-$36,400 area could serve as support.