Did Bitcoin stagnate after the approval of ETFs?
Three technical analysis indicators allow you to understand what is happening with Bitcoin.
Key facts:
• The 'bears' and the 'bulls' are showing equal strength in the fight to prevail in the market.
• In the next few hours or days, Bitcoin should take a definite trend.
Great was the expectation in the market regarding spot Bitcoin (BTC) ETFs in the United States. On January 10, 2024, the expected event occurred, and the next day, these investment funds began trading on the stock market of the North American country.
The price of BTC, so far, does not exhibit the behaviors that many predicted. Bitcoin is not rising non-stop due to the entry of money into the ecosystem, nor is it experiencing a massive drop as a result of traders who decided to apply the strategy of 'buy the rumor and sell the news.'
What has been observed is that, after rising towards the area close to $49,000, the price of Bitcoin returned to previous levels, around $45,000 or $46,000.
Three technical analysis indicators show that Bitcoin currently has a 'healthy' price, meaning that it could continue to move sideways for some time until new fundamental factors push it towards a clearer trend.
Firstly, the Relative Strength Index (RSI) does not show overbought conditions in either the daily time frame or the 4-hour time frame, which are the two most commonly used by medium and long-term traders. This implies that Bitcoin is currently in a 'comfortable' position. There is no perceived risk of a sharp drop or a significant price increase.
Additionally, trading volume on cryptocurrency exchanges is low compared to previous months. This indicates that retail investors are not actively trading in either direction. It's worth noting that large institutions typically operate on platforms other than Binance or Coinbase; instead, they use specialized services designed to meet their needs, allowing them to buy or sell BTC in large quantities without necessarily affecting the price.
Currently, Bollinger Bands show low volatility for Bitcoin, suggesting a relatively calm price movement. While touching the upper or lower bands can signal potential trend reversals, it doesn't necessarily signify overvaluation or undervaluation. Other factors like market sentiment and historical price context contribute to interpreting Band touches. It's essential to avoid relying solely on Bollinger Bands for predicting future price movements and consider them as one piece of information within a broader analysis.
At the moment, there is low interest among retail investors in trading Bitcoin. Simultaneously, there is a relatively equal fight between sellers and buyers, contributing to the stability of the price.
Everything could change in the coming days or hours when the 'bulls' (bullish traders) or 'bears' (bearish traders) prevail in the market. The bulls could be the same companies issuing Bitcoin ETFs if there is high demand for their financial products. If this happens, they would need to enter the market to buy Bitcoin to back up their funds, which, by the simple law of supply and demand, would cause the price to rise.
While the recent ETF launch brought bullish sentiment, two factors could potentially act as counterbalances. Firstly, there's a chance of "sell the news" behavior from traders who capitalized on the hype surrounding the event. If a significant number of them choose to exit their positions now, with high volume, it could put downward pressure on the price.
Additionally, on-chain data reveals that Bitcoin miners are currently selling at the highest rate in six years. While not inherently bearish, this is worth monitoring. Sustained selling pressure from miners could contribute to price declines, but it's crucial to consider the context. Operational costs, equipment upgrades, or simply profit-taking could all be motivating factors, and a high selling volume alone doesn't guarantee a sustained downtrend.
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