Bitcoin, also known as BTC, has been experiencing significant price fluctuations recently. After reaching a peak of $70,016 in July, Bitcoin struggled to maintain its upward trend, resulting in a 4.63% decline over the past month.
Despite some attempts to reverse this trend and a 4.16% increase over the past week, Bitcoin has struggled to sustain its momentum. Currently, Bitcoin is trading at $58,093, representing a 0.40% decrease in the last 24 hours.
The trading volume for Bitcoin has also decreased by 19.90% to $29.7 billion over the past day, indicating market indecision and a lack of clear direction.
Industry experts predict a further potential decline in Bitcoin’s price before any possibility of a reversal. Notably, respected crypto analyst Ali Martinez anticipates a drop towards its realized price, pointing to the cryptocurrency’s 200-day moving average as a key indicator.
Market Sentiment Insights
According to Martinez’s analysis, Bitcoin typically shows strong returns when trading above its 200-day moving average. Conversely, dropping below this level often leads to a sustained downward trajectory.
Given Bitcoin’s recent trading performance below $64,000, there are indications that it might be heading towards its realized price of $31,500 in the near future.
Traders often consider Bitcoin to be in a downtrend when it trades below the 200-day average and bullish when trading above it.
Historically, Bitcoin tends to witness price drops after falling below its 200-day moving average. Instances from past market cycles, such as during the 2016-2017 bull market and the 2018-2019 cycle, support this trend analysis.
Recent data from July 4th shows Bitcoin falling below its 200-day moving average to $57,300, triggering concerns about a further price decline.
On a positive note, when Bitcoin breaks above this trendline, prices tend to surge, as seen in past instances that led to significant price increases.
Bitcoin’s Chart Signals
While Martinez’s analysis suggests a potential decline following a drop below the 200-day moving average, other indicators provide additional insights.
For example, Bitcoin’s Long-Term Holders Spent Output Profit Ratio (SOPR) has been on a downward trend since August 29th, signaling bearish sentiment among long-term investors. This could lead to increased selling pressure and further price declines.
Moreover, Bitcoin’s Fund Flow Ratio has decreased in the past month, indicating reduced capital inflow relative to trading volume. This lack of confidence among investors may result in additional selling pressure.
Considering these factors, Bitcoin is potentially poised to decline to $54,147 in the short term, as suggested by current market sentiment. However, breaking above the trendline could propel prices towards $64,727.