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Analysis of the current situation of the price of Bitcoin; What do the indicators say?

تحلیل_قیمت_بیت_کوین،_دامیننس،_حجم_معاملات،_CDD،_MVRV

Bitcoin price reached $23,000 today in line with its upward movement. The breaking of one resistance after another by Bitcoin has made traders hesitant to exit the market and save profit or hold to receive more profit. In this article, we will examine the current situation of Bitcoin price using different metrics.

According to Mihan Blockchain, market indicators and indicators can always provide us with a more comprehensive view of the continuation or change of a trend in the analysis. In this article, we examine the current situation of Bitcoin price using the RSI indicator, upcoming support and resistance levels, volume of transactions, BTC price CME chats, Bitcoin dominance, total market value and such indicators as MVRV and SUPPLY ADJUSTED DORMANCY.

Dear users of the blockchain country, this article is only the analysis of its authors and is not considered an investment recommendation in any way.

1- divergence of the RSI index

On the 4-hour chart of Bitcoin, we saw that the price broke out of a descending corner pattern (orange lines) after 7 months. In the principles of technical analysis, usually after this event, the highest price inside the pattern is considered as a price target, which here is equal to about $25,000.

Important support and resistance levels in this time frame are shown with green and red boxes. As it is known, currently around the price of 24,600 to 25,200 dollars is considered a strong resistance range of Bitcoin. And on the other side, the range of $18,200 to $18,600 is the first support and the range of $15,500 to 15,900 is the second support of Bitcoin. The reason for the importance of the $18,000 range is explained in this article.

Since the peak of Bitcoin price last week to the $21,500 range, the price was hovering in an ascending channel (red lines) for a while until it managed to break this channel to the upside last night. From a technical point of view, usually when the price breaks a channel in a favorable direction (upward here), it returns to that channel again.

This happened in addition to the fact that The RSI indicator clearly shows a bearish divergence, has been placed and increases the possibility of price correction. In this case, we can expect that after a price increase (probably in the form of a wick) in this time frame, the price will be corrected to the lower side of the drawn ascending channel. The price range for this side at that time should be around $20,900 as shown in the figure below.

Bitcoin price chart 4-hour time frame Source: Trading View
Bitcoin price chart 4-hour time frame Source: Trading View

RectCapital is the name of the famous analyst who mentioned the monthly chart of the RSI indicator in the opposite tweet. According to this chart, the 45 level of this indicator occurred in the bear markets of 2015 and 2019 when the price floor occurred, and the trend changed from that area. According to him, returning above this level can be a sign of changing the market trend to an upward trend in the monthly time frame. Of course, we still have to wait until the end of January to check this happening.

RSI monthly status Source: Twitter
RSI monthly status Source: twitter

Conclusion: Currently, in the 4-hour time frame, the RSI indicator shows a downward divergence, and the possibility of price correction is high. But in the monthly time frame, if this indicator remains above the 45 level at the end of January, we can expect an upward trend in the overall price of Bitcoin.

2- Reducing the volume of transactions

The volume of Bitcoin transactions made in exchanges is another parameter that should be examined. Usually, one of the signs of price manipulation in a strong price trend by the big players in the field is not accompanying the volume of transactions.

The chart below uses 2 volume indicators to check this issue. The first indicator on the right side of the BTC chart is the Volume Profile, which examines the total volume of transactions at different times at a specific price. This chart is usually used to find support and resistance levels.

Currently, these volume candles indicate that the forward resistance is in the range of $22,800 to $23,700, and the first support is in the range of $19,200 to $19,800. In addition to this analysis, we also used retracement Fibonacci levels to draw the support and resistance points of this path, which can be recognized by the purple lines in the figure below. As it is clear, with the price increase from $21,500, the first heavy resistance is the 1.618 Fibonacci level of the overall downtrend. This level is now at $25,200.

But in the lower part of the chart, the daily trading volume oscillator is used. As it is known (marked in red), since January 13th (23rd), the volume of Bitcoin transactions has decreased. Therefore, it can be said that RLast week’s bullish trend did not accompany the price of Bitcoin with trading volume. This fact strengthens the hypothesis of BTC price manipulation by whales.

Daily timeframe bitcoin price chart
Daily Time Frame Bitcoin Price Chart Source: TradingView

Conclusion: The volume of Bitcoin transactions has decreased, which can be a sign of weakening of the recent upward trend or market manipulation.

3- Creating CME chats on the Bitcoin chart

The gap or gap in the price of Bitcoin on the Chicago Stock Exchange (CME) is usually filled in the short or medium term. There are currently 4 CME price charts on the Bitcoin chart, which are marked with green circles in the figure below. The 2 old chats are about $35,000 and $27,500. But in the last 2 weeks, 2 new chats have been created in this chart. The first of these is the $19,800-$20,400 range that was established during last week’s break and is definitive. But with last night’s events, the CME price closed around $22,500 and Monday’s market opening at current levels or higher (near $23,000) will create a new price gap.

CME Price Chats on Bitcoin Chart Source: TradingView
CME Price Chats on Bitcoin Chart Source: TradingView

Conclusion: The CME gap created in Bitcoin price around $19,800 may incline the price towards this range in the near future.

4- Increasing the dominance of Bitcoin

In another tweet, Rect Capital mentioned the status of Bitcoin dominance. From his point of view, this parameter is rising in a downward angle pattern in the monthly time frame after hitting the floor. Currently, this indicator is around 44%, but even if this pattern breaks upwards, it will face a very heavy resistance in the 50% area (red area).

Bitcoin Dominance Status Source: Twitter
Status of Bitcoin Dominance Source: twitter

Conclusion: Bitcoin dominance is currently in an upward trend, which indicates the transfer of money from stablecoins or altcoins to BTC, but this may be reversed in the distant future.

5- Increasing the market cap and decreasing the market value of stable coins

The total value of the cryptocurrency market has returned to above 1 trillion dollars. Dave The Wave is the name of the analyst who shared the chart below which is the weekly chart of this index. According to this analyst, after the exit of the dollar value of the cryptocurrency market from an upward channel and the withdrawal of money from this market, now this parameter has returned to the top of the curve drawn by him, which can promise the beginning of a new period for attracting capital in the cryptocurrency market.

Total Crypto Market Cap Chart Source: Twitter
Chart of the total market value of cryptocurrencies Source: twitter

In the previous part, we said that the dominance of Bitcoin has increased, and in this part, we mentioned the increase in market cap. Another important thing to consider is how much of their stablecoins investors have spent on buying bitcoins and altcoins.

In the figure below, the above chart is related to the dollar value of the stablecoin market. This index has reached around 132 billion dollars with a decrease of 4.58%, equivalent to 6.37 billion dollars, since November 22 (December 1). Since the same date, the total value of the cryptocurrency market (bottom chart) has increased by about 35%, equivalent to $259 billion, reaching the $1 trillion mark.

Comparison of the market value chart of cryptocurrencies with the market value of stablecoins. Source: Trading View
Comparison of the market value chart of cryptocurrencies with the market value of stablecoins. Source: Trading View

Conclusion: The decrease in the market value of stablecoins, along with the increase in the market value of cryptocurrencies, indicates the desire to move from stablecoins to buying, and the increase in dominance of Bitcoin indicates that a large share of this liquidity circulation is allocated to Bitcoin.

6- Status of such Bitcoin indicators

The significant growth of the price of Bitcoin in recent days has caused one of the most important indicators of Anchan, which is very useful for analyzing the market situation in the long term, namely the MVRV Z-Score index from the “Bear Market Floor” range, which is marked in green in the chart below. is, get out.

MVRV Z-Score index
The departure of the MVRV Z-Score index from the “bear market floor” range; Source: LookIntoBitcoin

However, while the MVRV Z-Score and many other such indicators have broken out of the bear market bottom and have issued a bullish signal, the Supply Adjusted Dormancy indicator (shown in the chart below as its 100-day simple moving average) is one such indicator. which can be a sign of coming selling pressure in the future.

Dormancy
Dormancy indicator for Bitcoin network; Source: CryptoQuant

As can be seen in the chart above, periods of increased dormancy in a bear market are usually accompanied by strong selling pressure. For example, in the bear market of 2018, Dormancy increased from August, and three months later in November 2018, we saw a 50% drop in the price of Bitcoin. In the bear market of 2022, Dormancy has started to increase since October, and we should see an event that accompanies the movement of old coins and reduces Dormancy.

You can use this article to read the analysis of other such Bitcoin indicators.

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