Bitcoin (BTC) has seen a slight price decline recently, but according to a new report analysisHowever, there could be signs of a potential upside in the short term.
CryptoQuant analyst, Yonsei Dent, shared his thoughts on the CryptoQuant QuickTake platform, focusing on the Coinbase Premium Index and its impact on Bitcoin price movement.
Key indicators of Bitcoin’s short-term momentum
Dent’s analysis takes a closer look at how the movement of the Coinbase Premium Index — a measure of the price difference between Bitcoin on Coinbase and other exchanges — could indicate potential price trends for Bitcoin.
Dent highlighted the use of daily (24-hour) and weekly (168-hour) moving averages to assess short-term momentum. Specifically, when the daily moving average crosses the weekly moving average, it has historically been a positive signal for Bitcoin price.
Dent pointed to previous instances in which this technical pattern, often called a “golden cross,” has indicated a short-term increase in Bitcoin’s value.
For context, a golden crossover in technical analysis occurs when the short-term moving average (usually 50 days) crosses above the long-term moving average (often 200 days).
This pattern is considered bullish, indicating potential upward momentum in the asset’s price. It indicates that buying interest is increasing, and that market sentiment is shifting toward optimism.
The daily moving average has temporarily breached the weekly moving average, prompting Dent to suggest that this could be a key support level for Bitcoin, particularly around the $66.4000 level.
Higher lows and positive momentum may indicate an uptrend
So far, Bitcoin has continued to gradually decline after trying to reclaim the $70,000 price mark on Monday. This indicates that the asset may have encountered significant resistance around that price area. At the time of writing, Bitcoin is down 2.2% in the past day at a current trading price of $65,832.
Despite the current price action, Dent analysis indicates that the asset is forming higher highs and higher lows since August, which is generally considered a bullish pattern.
This bullish structure, where the lows and highs are gradually increasing, could indicate that the market is heading towards a more sustainable price recovery.
Dent’s reference to the Coinbase Premium Index further strengthens this possibility, as higher premiums on Coinbase often indicate stronger buying pressure from US-based institutional investors. The analyst expects this upward momentum to continue in the short term if current patterns continue.
Featured image created with DALL-E, chart from TradingView