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Bitcoin (BTC) has been experiencing price volatility since the end of April with significant fluctuations in its value. At the time of writing, the cryptocurrency has experienced a 3% decline over the past 24 hours and is currently trading at $28,400. However, it is currently in an accumulation range of $27,800 to $30,000.
Bitcoin Bulls Are Cautious
BaroVirtual from Cryptoquant recently shared his analysis of potential targets for Bitcoin. The bearish divergence of the BTC: On-Chain Summation Index suggests a target of around $27,200, according to the analyst. The Head and Shoulders (H&S) pattern also points to a lower $25,000 target range.
The BTC On-Chain Summation Index is a metric that tracks the amount of Bitcoin being transferred on the blockchain. When the index shows a bearish divergence, it suggests a decrease in the number of bitcoins being transferred, which could lead to a price decrease.
At the same time, Binance, one of the world’s largest cryptocurrency exchanges, received the largest one-time Bitcoin deposit last week. The deposit, made to an address that had been inactive for four months, came from five separate addresses and totaled over 1,200 BTC, worth over $35 million at current market prices.
Binance wallet deposits in the last 24 hours. Source: Arkham Intel on Twitter.
This was reported by the analytical company Arkham, which tracks cryptocurrency transactions. The firm noted that the deposit was made in one transaction and that the funds were sent to a previously unused deposit address. Will this lead to a continuation of the bearish momentum? This remains to be seen.
Moreover, according to Material Indicators, a cryptocurrency analytics firm, the recent close/open of the Bitcoin monthly candle signaled a potential short-term correction in the price of the cryptocurrency. The Trend Precognition A2+ algorithm generated a short signal indicating a potential decline in the price of bitcoin, as shown in the chart below.
Foreseeing the trend of the material indicator signals a potential fall in the price of BTC. Source: Material indicators on Twitter.
However, according to Material Indicators, the signal is tentative until the candle closes, and a pump above the April high could invalidate it. In addition, the Federal Reserve’s upcoming Federal Open Market Committee (FOMC) interest rate decision on Wednesday could be the catalyst for significant price action in either direction.
If the Federal Reserve raises interest rates by 25 basis points, this could lead to a stronger US dollar and put downward pressure on the price of Bitcoin. However, continuing to suspend or maintain current rates may increase investor confidence and lead to an increase in cryptocurrency prices.
While there are potential downside targets for BTC, data suggests that the $27,000 mark could support the cryptocurrency and repel bears. This level has already shown its resilience as a support level, holding up well against significant selling pressure since April 21st.
The price of BTC fell on the 1-day chart. Source: BTCUSDT on TradingView.com.
Featured image from Unsplash, chart from TradingView.com