BTC Bulls Back in Town but Will $60K Fall?

Bitcoin recently saw a surge in demand near a crucial support level, leading to a slight recovery above the 200-day moving average at $59.2k.

This price action highlights the possibility of a bullish reversal if the price settles above the 200-day moving average.

Technical Analysis

by Cheyenne

Daily chart

A detailed analysis of the daily chart of Bitcoin reveals that after a long-term downtrend, Bitcoin broke the 200-day moving average at $59.2K, introducing a significant amount of fear and uncertainty into the market.

This moving average is a vital support level for Bitcoin, and a break above it usually signals a potential downtrend. However, Bitcoin found strong demand at the major support area at the 0.5 Fibonacci level ($56k), leading to a slight bullish recovery. The price has now climbed back above the 200-day moving average, signaling a potential bearish trap.

Additionally, the bullish divergence between the price and the RSI suggests a possible bullish reversal in the near term. If Bitcoin settles above the 200-day moving average, it could confirm a bullish recovery in the medium term, with the next target being the 100-day moving average at $64.6K.

4 hour chart

On the 4-hour chart, Bitcoin faced rejection near the multi-month upper bound at $71K, and entered a sustained downtrend characterized by lower lows and higher highs.

Upon reaching the crucial support area at $56k, the bearish momentum faded, leading to a sideways consolidation. Following this consolidation, increased buying activity led to a slight bullish recovery.

Bitcoin is now at a crucial resistance zone, including the important psychological resistance level at $60,000 and a multi-week downtrend line, where selling pressure could increase.

If the cryptocurrency reclaims this resistance area, the uptrend could continue towards the $65,000 level. Conversely, a rejection at this level is likely to lead to a continuation of the downtrend, targeting the critical support level at $56,000.

On-chain analysis

by Cheyenne

On-chain data highlighting miner profitability has proven to be a valuable tool for predicting market bottoms during bear markets and the end of correction periods within bull markets. Analyzing this data can provide insights into potential market trends, especially with regard to Bitcoin price movements.

Historically, large drops in miner profitability during bull cycles have often been a precursor to large increases in Bitcoin prices. Notable instances of this have occurred in:

• 2016: During this bullish cycle, miner profitability dropped sharply, as shown in the red circle area. Following this drop, Bitcoin experienced a strong upward trend.
• 2020: A similar pattern was observed, with a rapid decline in miner profitability following the start of a strong Bitcoin bull market.

As of 2024, a similar pattern has been detected in the profitability of mining companies. The index has declined significantly, mirroring the movements seen in the bull cycles of 2016 and 2020. This suggests that while the exact end of the current correction period is uncertain, a transition to a bull market may not be far off.