Disclaimer: The information presented does not constitute financial, investment, trading or other advice and is solely the opinion of the author.
- The market structure has been bearish since the end of April.
- The February breaker block could see heavy activity from BTC bulls.
After the powerful gains Bitcoin [BTC] recorded in January and March, investor sentiment behind BTC has shifted from utter dejection to hope and optimism. This was especially true after the rally in March, following the retest of the $20,000 support zone.
Read Bitcoin [BTC] Price Forecast 2023-24
However, the bulls were unable to break the $30,000 mark. A recent report stressed that the price drop was in response to the network overheating. Can the buyers exercise a reversal and where in the charts can it take place?
The drop below $26.8k gave power to the bears
Source: BTC/USDT on TradingView
The rally in March meant that Bitcoin had a bullish market structure until the second half of April. On April 21, BTC dropped below $27.7k, turning the market structure to bearish. That has remained the case for the past month.
For the past two weeks, the bulls desperately tried to defend the $26.8k – $27k area, but were overcome on May 24. Investors in traditional markets seemed concerned about the US debt ceiling, which in turn had a negative impact on crypto markets.
In the south, a bullish breaker block (cyan) sat on the 1-day time frame in the $24k-$25k region. It was previously a bearish order block that was broken during the March rally. This region coincides with the $25.2k and $24.3k levels, marking it as an important support zone.
The relative strength indicator was below the neutral 50, indicating an ongoing bearish trend. However, the On Balance Volume indicator has remained flat for the past two months despite the price drop.
Investors noticed an increase in paper gains in recent months as sentiment began to shift toward hope
Source: Glasnode
The NUPL metric showed that the network as a whole was profitable. The despondency of November and December 2022 began to subside in January.
A closer examination of NUPL values in 2023 suggested that investors began entering the markets after crossing the $20,000 level. This highlighted the critical importance of $20,000 psychologically.
Source: Glasnode
Another factor that long-term investors can take heart from is the rising hash rate.
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Despite trends in price action, the hash rate has been continuously moving up. This showed that the health of the network was good and that security was not immediately compromised.
From a technical perspective, the $24,000-$25,000 area may offer buyers an opportunity to enter the markets. Risk averse traders can err on the side of caution and wait for a strong bullish reaction in terms of price and volume before getting in.