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Bitcoin Targets $40K As Technical And On-Chain Analysis Favor Bulls – Cryptovibes.com – Daily Cryptocurrency and FX News

Bitcoin price drawdown from 52-week high. Source: Delphi Digital


The price of bitcoin (BTC) experienced a bullish turn of events on June 13 when the price broke out to reach highs of $39,252 at the time. However, many analysts still insist on remaining on the fence when it comes to matters determining whether the biggest crypto is ready to proceed with its uptrend.

At the moment, Bitcoin is still 36% away from its all-time high but several technical indicators show that the bulls are gathering some strength.

To date, the cryptocurrency market remains on edge after bitcoin collapsed from its all-time high near $65,000 set two months ago. Delphi Digital published an extensive market analysis that identified a “major head and shoulders pattern”. That pattern might cause more near-term pain in case bitcoin plunges below $30,000.

With that put in mind, it appears like now is a great time to review some major data points to gain a bigger perspective on where the price of bitcoin might go next.

Near-Term Holders Suffer Losses

A 50% drop in price in the last two months may appear extreme to investors unfamiliar with the volatility of the crypto market. However, it is not surprising for the long-term holders who have encountered many drawdowns of bigger magnitudes in the past decade.

Bitcoin price drawdown from 52-week high. Source: Delphi Digital

According to the Delphi market chart, a loss of 70% or greater is not strange for bitcoin, mostly after a considerable run-up in price, indicating that the possibility for more pain in the current market is still a major threat as the bulls fight with the bears in the mid-$30,000 range.

The speedily dropping prices sent the new and old bitcoin holders running for cover, resulting in many traders selling at losses, according to SOPR (Spent Output Profit Ratio) data highlighted by crypto analyst Filbfilb.

Bitcoin spent output profit ratio. Source: Decentrader
Bitcoin spent output profit ratio. Source: Decentrader

In the last several days, signs of a SOPR reset have come up showing that the average wallets are now selling at some profit once more. Notably, the Crypto Fear and Greed Index (CFGI) has dropped to its lowest level since the March 2021 sell-off that was caused by the coronavirus pandemic.

BTC drawdown vs. crypto fear and greed index. Source: Delphi Digital
BTC drawdown vs. crypto fear and greed index. Source: Delphi Digital

The high levels of fears that have dominated the markets currently have pushed many traders and investors to the sidelines as worries of more losses remain a legitimate probability.

However, for the contrarian investors, the low scores on the index are a signal to be greedy whenever the others are fearful as explained by Warren Buffett. The market charts show that buying in the high fear moments seems to be a great entry-level.

Sentiment Starts To Rebound

While it seems true that bitcoin has seen its price drop by over $30,000 in the last two months, it is critical to note that the total amount it has fallen with and its current price are almost double the previous all-time high that was set in 2017. This shines a light on just how massive the rally has been in the past six months.

On-chain data analysis acquired from Decentrader shows that an ‘oversold’ signal was triggered recently:

“suggesting that BTC may soon be ready to turn around and move to the upside.”

Bullish signal provided by the active addresses sentiment indicator. Source: Decentrader
Bullish signal provided by the active addresses sentiment indicator. Source: Decentrader

Interestingly, the active addresses sentiment indicator compares the 28-day change in price, represented on the market charts, with the 28-day change in on-chain active addresses represented clearly on the charts.

In the chart above, the orange line moving from below the dotted green line back upwards into the active address change band is said to be a bullish sign, and it happened on June 10, showing that there is a possibility of a turnaround in the current market.

Based on one popular analyst on Twitter, Rekt Capital, Bitcoin is still on the path to set a new all-time high.

But for now, maybe it is best to just take a breather from staring at charts and wondering which way bitcoin will choose to go next. The long-term market outlook appears strong as nations like El Salvador start choosing bitcoin as legal tender and more people gain some interest in the biggest crypto.





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