Following an unexpected performance in September, Bitcoin [BTC] faced challenges at the start of October, a month typically associated with an upward trend. Consequently, BTC witnessed a notable decrease in the past week.
Currently, Bitcoin is valued at $61980, reflecting a 5.41% decrease on weekly charts and a further 0.34% decline on daily charts.
Before this decline, BTC had shown a positive trend, rising by 9.87% on monthly charts.
The prevailing market conditions prompt inquiries about the future direction of BTC, particularly after the recent slump.
Against this backdrop, respected crypto analyst Rekt Capital has hinted at a potential rally, highlighting the significance of the 21-week bull market EMA.
Interpreting Market Sentiment
In the analysis by RektCapital, it was emphasized that the retesting of the 21-week EMA as a support level holds significance.
The maintenance of BTC above this threshold signifies a bullish market sentiment, indicating a surge in buyer activity and a preference for upward price movement.
As per the analysis, BTC has broken free from a long-standing downtrend resistance line, hinting at a shift towards a bullish direction and a cessation of the downtrend momentum.
Therefore, a strong closure above the 21-week EMA, combined with a confirmed breakout from the extended downtrend, would signal further upward thrust, particularly following a bullish weekly closure above $62k-$63k.
Evaluating Bitcoin’s Chart Trends
Undoubtedly, RektCapital’s analysis offered an optimistic view for BTC. Hence, it is crucial to assess other market indicators.
One such indicator is Bitcoin’s MVRV long/short difference, which has transitioned from a downtrend to an uptrend.
Since September 4th, the MVRV long/short difference has been on the rise after a period of decline, indicating growing confidence among long-term holders who are reluctant to sell due to existing profits. The uptrend implies a strong faith in positive movements.
Moreover, the Fund flow ratio has decreased over the past six days despite market fluctuations, indicating reduced BTC deposits for selling on exchanges and a preference for storage in private wallets. This behavior points towards accumulation as investors anticipate further growth.
Furthermore, Bitcoin’s Funding Rate Aggregated by Exchange has largely remained positive, indicating a prevailing optimism among investors taking long positions in expectation of future price hikes.
In essence, Bitcoin has traded sideways recently, with investors focusing on accumulation and long positions, hinting at a market poised for advancement. If the current positive sentiment persists, BTC is likely to challenge the $62785 resistance level in the near future.