BTC Encounters increasing sell pressure as $95K resistance persists, potentially challenging its price surge trajectory.
Bitcoin's recent relentless charge seems to be slowing down, as the cryptocurrency encounters a steep wall of resistance around the $95,000 milestone. The market shows signs of exhaustion, hinting at a potential corrective phase before the next bull run toward new all-time highs.
Technical Analysis
The Daily Chart
Following a powerful surge beyond the 100-day and 200-day moving averages last week, Bitcoin charged its way toward the critical $95,000 zone. This region acts as a highly significant technical hurdle, not just due to its psychologically relevant round number but also due to its alignment with prior significant swing highs and order block zones. However, as Bitcoin approached this barrier, buying enthusiasm waned. The chart now reflects a period of low volatility and sideways consolidation, a telltale sign of indecision at strong resistance levels.
The RSI has also penetrated into overbought territory, suggesting that short-term buyers might be running out of steam. These factors hint at an impending pullback, likely toward the $90,000 zone where the 100-day and 200-day moving averages now serve as dynamic support. A clear break above $95,000 would clear the path for Bitcoin to revisit its previous all-time high at $109,000, reestablishing dominance in the market.
The 4-Hour Chart
On the 4-hour timeframe, the technical picture supports a potential short-term correction. After an aggressive surge, Bitcoin's rally peaked at the prior swing high of $95,000, mirroring a classic three-drives pattern, a common bearish reversal formation that often signals smart money distribution at key levels.
Furthermore, a bearish divergence between price action and the RSI suggests weakening momentum. Despite higher highs on the chart, the RSI has failed to follow suit, indicating a slowdown in buying strength. Coupled with the presence of substantial selling pressure around $95,000, these factors imply that a short-term correction might be in the cards.
The most probable scenario in the short term involves a retreat toward the $90,000 region, which now forms a crucial support zone. Should bulls successfully defend this level, it could establish a solid foundation for renewed bullish momentum aimed at breaking through the $95,000 barrier, with $109,000 as the next significant upside target.
On-chain Analysis
Intriguing insights into Bitcoin's price action can be gleaned by examining the recent behavior of funding rates. During the prolonged correction between March 2024 and October 2024, Bitcoin's funding rates frequently turned negative, even during brief rallies. This trend demonstrated the presence of short-sellers and dwindling market confidence, largely driven by retail traders either distributing tokens or hedging against downside risk.
A strikingly similar pattern is emerging. As Bitcoin recently rallied and approached the challenging $95,000 resistance zone, the funding rates flipped negative once again. This disparity between rising prices and falling funding rates suggests that a considerable portion of the market is either hedging against potential downside risk, anticipating a bearish reversal at resistance, or engaging in distribution to manage exposure. Such behavior is often a precursor to short-term bearish retracements. If historical trends hold true, this retracement could ultimately serve as a healthy correction for the broader bullish structure.
Sources:
- Why Do Cryptocurrency Exchanges Use Funding Rates?
- Bitcoin Halving: Predicting the Next Halvening
- Historical Bitocin Price Movements: Crypto Analysis
- Understanding the Relative Strength Index (RSI)
- Bitcoin Price Analysis: After the COVID-19 Rise, What Is Next?
- In the realm of finance and technology, Bitcoin's recent technical analysis shows a potential slowdown, as it reaches the $95,000 milestone, a critical resistance zone.
- The daily chart indicates a period of low volatility and sideways consolidation, suggesting indecision at the strong resistance levels, with the RSI entering overbought territory.
- On the 4-hour chart, a bearish divergence between price action and the RSI, combined with selling pressure around $95,000, suggests a short-term correction toward the $90,000 support zone.
- A clear break above $95,000 could reestablish dominance, leading Bitcoin to revisit its previous all-time high at $109,000.
- Looking at the on-chain analysis, the negative funding rates indicate a significant portion of the market hedging against potential downside risk, anticipating a bearish reversal or engaging in distribution.
- If historical trends hold true, this retracement could serve as a healthy correction for the broader bullish structure, similar to the trend observed between March 2024 and October 2024.
