Following several weeks of significant selling pressure, Bitcoin (BTC) has entered a stabilization phase, currently trading below the $85K threshold but above $80K. Bulls now encounter an essential challenge, as they need to elevate BTC above $90K to hinder bears from pushing prices down further.
Bitcoin has seen a decline of over 29% since hitting an all-time high (ATH) in January, which has sparked increased speculation about a possible bear market. Market sentiment remains cautious, with traders divided on whether BTC has hit a bottom or whether there are still further declines to anticipate.
Data from CryptoQuant indicates that the current period of negative demand suggests BTC distribution, a trend that has historically resulted in temporary corrections, although it has not always indicated a complete trend reversal. The data shows that Bitcoin demand has decreased by roughly -140K BTC, which is notably lower than the crisis outflows of -268K BTC and -437K BTC recorded previously.
While this localized selling pressure introduces uncertainty, analysts posit that the magnitude of the current decline does not jeopardize the broader bull market. The next few days will be vital as Bitcoin must maintain its present range and reclaim key resistance levels to affirm a recovery or risk incurring additional losses if bears maintain control.
Bitcoin Bull Cycle Remains Intact
Both the cryptocurrency and US equity markets are facing challenges amidst macroeconomic uncertainty and fears of a trade war, creating a difficult landscape for investors. Bitcoin (BTC) has now declined nearly 20% since the beginning of the month, with the bearish trend seemingly set to persist as sentiment remains weak.
In spite of this unfavorable short-term outlook, the fundamental aspects of the market remain robust. Institutional adoption is on the rise, and US President Donald Trump’s proposal to establish a strategic Bitcoin reserve could serve as a significant catalyst for future price movements. Many analysts contend that while present conditions appear bearish, this does not necessarily indicate the conclusion of the bull market.
Top analyst Axel Adler supports this perspective, sharing thoughts on X that BTC’s decline is merely part of a regular market cycle rather than an onset of a sustained downturn. Adler notes that the ongoing phase of negative demand implies BTC distribution, a trend historically associated with temporary corrections but not always with a complete reversal. Demand has fallen by about -140K BTC, which is considerably less than the previous crisis outflows of -268K BTC and -437K BTC.
Adler also emphasizes that, despite the current localized selling pressure, this decline does not jeopardize the broader bull market. Rather, it appears to be a short-term event of profit-taking following Bitcoin’s all-time high (~$109K) and a response to macroeconomic conditions.
In addition to the market uncertainty, the Federal Reserve continues its strict monetary policy, while inflation data has exceeded expectations, leading markets to adjust their rate projections. This has intensified pressure on risk-sensitive assets, including BTC, contributing to added volatility and cautious investor sentiment.
Price Struggles Below Essential Moving Averages – Bulls Attempt To Reclaim $85K
Bitcoin is presently trading at $84,300, striving to regain momentum after weeks of downward pressure. The price currently stands below the 200-day exponential moving average (EMA) at $85,500 yet remains just above the 200-day moving average (MA) near $84,000. Bulls need to defend this support level and reclaim the $85K mark to avoid further declines.
For a confirmed recovery rally, BTC needs to surpass $85K and make a significant push above $90K swiftly. Reclaiming these levels would indicate renewed bullish momentum, potentially reversing the current downtrend and leading to a retest of higher resistance zones.
Conversely, should BTC fail to recover above the 200-day MA and EMA, it may encounter intensified selling pressure, risking a fall below the $80K level. Losing this crucial psychological support could spark a wave of panic selling, forcing BTC into lower demand regions and prolonging the current bearish phase.
Given the uncertain market conditions, bulls must move rapidly to elevate BTC above resistance and mitigate further downside risks. The forthcoming trading sessions will be pivotal in shaping Bitcoin’s short-term trajectory.
Featured image from Dall-E, chart from TradingView
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