With liquidations in the crypto market rising to $880M in the past 24 hours, Bitcoin marked a 24-hour low at $76,600. Currently, with a sharp pull reversal, BTC price is trading at a market price of $81,738.
With a new bullish engulfing candle, the refreshing recovery in BTC price aims to reach the $86,000 level. Will a V-shaped reversal mark a new bullish phase for Bitcoin? Let’s find out.
BTC Price Action Signals Recovery Ahead
In the daily chart, the BTC price action showcases a bullish engulfing candle forming after five consecutive bearish candles. This ends the bearish streak on Bitcoin and further signals a quick reversal from the $76,722 support level.
With a lower price rejection, the bullish engulfing candle is presenting the possibility of a morning star pattern. Furthermore, this also comes as a potential retest of the broken 200-day EMA line. The dynamic average support resistance is at $85,672.
Due to the recent crash in Bitcoin prices, the 50- and 100-day EMA lines are on the verge of giving a negative crossover. Furthermore, the MACD and signal lines maintain a declining trend, reflecting the bearish momentum at play.
As the BTC price takes a quick reversal from the horizontal level, the underlying demand is projecting a new reversal rally. The reversal run could challenge the prevailing resistance trend line in the daily price chart.
However, a supply zone existing between $85,600 and $86,700 could act as a primary resistance.
Bitcoin Below 200DMA Witnesses Increased Miner Supply
As per Ali Martinez, Bitcoin is now trading below the 200-day moving average line. Based on the Mayyer multiple, the immediate support for Bitcoin is at $66,000. Supporting the chances of a steeper correction, the Bitcoin miner’s selling supply is increasing at swing lows.
As Bitcoin miners are offloading more BTC to near-swing lows, the increase in selling pressure could lead to a steeper correction. Recently, BTC price dropped to $76,600 with a surge in miner transfers. This highlights a forceful selling wave from miners, increasing the market liquidity.
The increased miner supply suggests a growing financial pressure on miners to suffer the increased mining costs. If the miner selling continues, a steeper correction is possible in Bitcoin. However, if buyer demand absorbs the supply, stability near the $80,000 support level could be seen in Bitcoin.
Hash Rate Trends Signals Market Divergence
As per James Van Straten, the hash rate is the critical signal in this macro noise. The hash rate on a 14-day moving average is less than 5% away from its all-time high.
This is a complete divergence away from the Bitcoin price. The highest hash rate drawdown in this capitulation has been near 6%. However, the highest price spot is at $45, marking a four-month low.
In the previous adjustment of 1.5%, the difficulty epoch of three days is already over 2%. As US miners have seen poor production in the past year, the foundry mining pool has remained stagnant at 30%. Hence, the incoming supply is possibly not coming from the US public companies.