Bitcoin price continues to prolong the monotony in a tight range above $29,100, with its immediate upside capped under $30,000. Its lull market structure may, however, result in more volatility, implying that investors and traders must be cautious.
The trading range in Bitcoin price, alongside that of altcoins like Ethereum, has narrowed significantly over the past six weeks, based on insights released by K33 Research, a digital assets wealth management platform.
According to the report, the crypto market stability continues to defy macroeconomic factors, and key industry events, which would have sent investors on a rollercoaster a few years ago.
“A deep crypto sleep tends to be followed by a violent wake-up,” Vetle Lunde a K33 senior analyst said. “The market is clearly in an unprecedented stable stage, which has typically acted as a massive pressure valve for volatility once it finally reignites.”
Meanwhile, support at $29,100 has been reinforced by the 61.8% Fibonacci level, and with the Money Flow Index (MFI) moving above the midline, the path with the least resistance could to the upside.
A rebound from that support would confirm a buy signal from the Moving Average Convergence Divergence (MACD) indicator. Traders trading this momentum indicator may want to ascertain that the MACD line in blue has flipped above the signal line in red before triggering their buy orders.
A subsequent break above the 50-day Exponential Moving Average (EMA) (red) would add credence to the uptrend, thus increasing investor confidence in the Bitcoin price recovery above $30,000.
“My short-term thesis,” Lunde continued, “is that the market’s volatility pressure is about to climax and that an eruption is near.”
Bitcoin’s five-day volatility low dropped below that of the S&P, Nasdaq, and gold. Based on the K33 Research report, this has happened only a handful of times, with a volatility eruption following thereafter.
Investors should consider the 30-day volatility index, which has recently dropped almost to a five-year low in addition to the volume significantly shrinking.
On-chain insights from Glassnode show that long-term holders of Bitcoin have been reducing their supply, suggesting that they are ready to sell, especially if the price sinks further below $30,000.
An increase in the supply of BTC held by long-term holders shows that investors are willing to keep their positions, instead of taking profits.
That said, losses below $29,100 support might trigger panic selling among investors, exerting more pressure on $28,000. It is too early to rule out the possibility of declines extending to $25,000 before Bitcoin begins the run-up to $35,000 and $38,000 subsequently.
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