Bitcoin’s price rally towards $106K shows signs of exhaustion with indications of short-term consolidation. While the overall trend is bullish, resistance levels are crucial. On-chain data reveals a decline in exchanges’ reserves, which may reflect reduced selling pressure but also waning demand. The market seems to be waiting for new drivers before making significant moves.
Bitcoin’s recent surge towards the $106,000 mark seems to be losing steam, showing signs of what many are calling exhaustion. Since the rally kicked off in mid-April, the prices have climbed significantly, but now they are straying into overbought territory on longer timeframes. Although the overarching trend is still positive, a short-term consolidation or even a slight pullback wouldn’t be unexpected given the current technical setup and on-chain indicators.
Taking a closer look at the daily chart, Bitcoin has jumped from approximately $90,000, successfully overcoming several resistance zones, notably around $98,000. However, it has now approached a critical supply area near the $106,000 level. The Relative Strength Index (RSI), which previously indicated overbought conditions, is now begining to roll over, signalling some potential weakness on the horizon.
Still, Bitcoin’s price is comfortably above key moving averages – the 100-day and 200-day locations hover around the $90,000 zone. This suggests that the overall macro trend remains intact. Nevertheless, it’s feasible that this recent sharp advance might pause, particularly if buyers struggle to break through the $109,000 threshold.
Flipping to the 4-hour chart, there’s a noticeable upward trajectory that halted just shy of the $109,000 mark. The RSI has dropped from above 75 down to the low 50s, hinting at a significant decrease in bullish momentum. Right now, the $101,000 to $102,000 area seems to be acting as short-term support. Should this level give way, the next considerable support is expected around $97,000 to $98,000.
On a more positive note, if Bitcoin can reclaim the $104,000 to $105,000 range, it could invalidate bearish speculation and set sights on $109,000 and potentially beyond.
From an on-chain perspective, the exchange reserves of Bitcoin are continuing to fall, which indicates a lowered sell-side pressure among long-term holders. In general, this lends a bullish sentiment over time. Nevertheless, the trend of declining reserves has begun to stagnate in recent weeks as fewer coins are being transferred to exchanges. This stagnation suggests that while there’s a lower supply of Bitcoin on exchanges, fresh demand might also be slowing for the moment. The market seems poised, perhaps waiting for new catalysts that could spark the next upward move.
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