• Bitcoin price eyes a retest of $34,485 as it trends higher after a breakout from a multi-year falling wedge.
  • Although there is a sell sign developing on the higher timeframe, investors need to wait for more confirmation.
  • The bears are likely to gain control if BTC loses the $19,600 level and sets up another lower low.

Bitcoin price shows a clear picture of its rally after it breached a long-term bullish pattern in mid-January. As the rally takes a breather, sell signs have started to emerge, which is putting investors in a confused state. 

Also read: Bitcoin Weekly Forecast: Assessing likelihood of 80% rally for BTC before 2023

Bitcoin price envisions its last leg of the rally

Bitcoin price action set up three distinctive swing lows and two swing highs as it dropped 77% between November 2021 and November 2022 from an all-time high at $69,000. These swing points, when connected using trend lines, reveal a falling wedge pattern.

So far, the pioneer crypto has rallied 26% from its breakout point at roughly $22,600. Bitcoin price has roughly 15% more to rally to meet the falling wedge’s theoretical target of $34,485. This target is obtained by measuring the distance between the first swing high and the swing low to the breakout point.

As Bitcoin price pauses its ascent, the Relative Strength Index (RSI) reveals a bearish divergence. This sell signal is obtained when the momentum indicator notes a steady decline while the underlying asset rises. The non-conformity that develops often results in a small pullback or a deep correction, depending on the market conditions.

Looking at the Awesome Oscillator, another momentum indicator, we cannot notice a bearish divergence, which reduces the overall confidence of a pullback, if any. If the macro outlook continues to worsen, causing widespread panic, then investors could pull out of BTC, triggering a sharp correction that will be in line with the bearish divergence’s sell signal. However, this outlook seems unlikely, considering the recent breakdown of the correlation of Bitcoin price with the US Dollar. 

If any pullback does occur, the $24,000 to $25,000 range is a good place to accumulate BTC. This move will allow buyers to extend the rally by 36% and easily tag the final target of $34,485. 

BTC/USDT 3-day chart

BTC/USDT 3-day chart

While the outlook for Bitcoin price is bullish, investors need to pay attention to the on-chain aspects of this rally. The short-term holder cohort has realized $292 million in profits; a level last seen in November 2021, just before BTC began its bear market.

Entity-adjusted short-term holder realized profit

Entity-adjusted short-term holder realized profit

Additionally, the 365-day Market Value to Realized Value (MVRV) for Bitcoin price has flipped above the zero line and currently hovers around 24.76%, a level that was last seen in November 2021. This index reveals that these investors could offload their holdings and trigger a sell-off that fits the pullback perspective noted above.

BTC 365-day MVRV

BTC 365-day MVRV

On the other hand, if the sell-off continues without a stop due to macroeconomic reasons, investors need to watchout for the $19,600 support level, a breakdown of this structure creating a lower low would invalidate the bullish thesis.

Such a development could see Bitcoin price slide down to the $18,784 barrier and, in a dire case, crash 28% and retest the macro bottom range, extending from $11,898 to $13,575.


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Join Telegram

Recommended content


Recommended Content

Editors’ Picks

PancakeSwap loses nearly 3% value intraday as the DEX crosses $1 billion in trade volume

PancakeSwap loses nearly 3% value intraday as the DEX crosses $1 billion in trade volume

Decentralized exchange (DEX) PancakeSwap (CAKE) announced in an official tweet that it has crossed $1 billion in trade volume on the Layer 2 chain, Base. CAKE on-chain metrics support the thesis of a recovery in the DEX token’s price. 

More Cryptocurrencies News

Shiba Inu hits new milestone, over $9 billion worth of SHIB tokens burnt

Shiba Inu hits new milestone, over $9 billion worth of SHIB tokens burnt

Shiba Inu (SHIB), the second-largest meme coin in the crypto ecosystem, recently hit a milestone in the volume of tokens burned. Shiba Inu has burnt over 410.72 trillion SHIB tokens since the inception of the burn mechanism in the project, worth over $9 billion.

More Shiba Inu News

Dogwifhat crashes 60%, but here's why you should not buy WIF yet Premium

Dogwifhat crashes 60%, but here's why you should not buy WIF yet

Dogwifhat (WIF) price shows a slowdown in the bearish momentum as it sets up a potential range. This development could lead to a good buying opportunity from a long-term perspective. 

More Dogwifhat News

XRP struggles to overcome $0.50 resistance, SEC vs. Ripple could enter final pretrial conference

XRP struggles to overcome $0.50 resistance, SEC vs. Ripple could enter final pretrial conference

XRP is struggling with resistance at $0.50 as Ripple and the US Securities and Exchange Commission (SEC) are gearing up for the final pretrial conference on Tuesday at a New York court. 

More Ripple News

Bitcoin: BTC’s rangebound movement leaves traders confused

Bitcoin: BTC’s rangebound movement leaves traders confused

Bitcoin (BTC) price has been hovering around the $70,000 psychological level for a few weeks, resulting in a rangebound movement. This development could lead to a massive liquidation on either side before a directional move is established. 

Read full analysis

BTC

ETH

XRP