Bitcoin Inches Towards $40k as On-Chain & Technical Analysis Support Bulls

The price of Bitcoin (BTC) took a positive turn on June 13 when it broke above $39,252, but many experts are still undecided about whether the cryptocurrency is prepared to resume its climb. Currently, the crypto market remains unsure – two months after Bitcoin trading hit its all-time high of about $64,000. Delphi Digital’s market research revealed a “big head and shoulders pattern” that might “mean further short-term downtrend for BTC, in case it falls breaks below $30,000.”

With that in mind, it’s a great idea to go through several critical information points to have a better idea of where Bitcoin’s price may go ahead. To those inexperienced with the fluctuation of the cryptocurrency market, a 50% drop in price in two months could seem excessive, but it makes complete sense to long-term hodlers who have witnessed several drawdowns of even greater scale over the past ten years.

As shown in the chart below, a drop of 70% or more is not unusual for BTC, particularly after a large run-up in price, suggesting that additional pain is already a possible as bulls and bears duke it out in the mid-$30,000 zone.

As per SOPR (Spent Output Profit Ratio) statistics noted by cryptocurrency analyst filbfilb, the fast decreasing prices led new and existing Bitcoin holders fleeing to the verge, leading in traders selling at a loss.

Indications of a SOPR reboot have arisen in recent days, suggesting that regular wallets are again offering at a profit once more. The Crypto Fear and Greed Index (CFGI) have likewise fallen to its lowest level since the Covid-19 pandemic-induced sell-off in March last year.

Many traders are staying on the sidelines due to the high levels of anxiety they are now experiencing, as more losses seem a genuine possibility. Low index scores, on the other hand, are a hint to unconventional traders to “be greedy when others are scared,” as Warren Buffet would say, and the chart above demonstrates that purchasing during times of elevated anxiety is an excellent entry point.

Although it’s true that Bitcoin’s price has dropped over $30,000 in the last two months, it’s worth noting that the value erosion as well as its spot price are roughly double the prior all-time high established in 2017, highlighting the magnitude of the rise over the last six months.

Decentrader’s on-chain research recently sparked an “oversold” signal, “implying that BTC may soon be poised to swing around and move upwards.” The prevailing addresses sentiment indicator contrasts the orange line, which represents the 28-day fluctuation in price, with the bands of grey lines, which represents the 28-day change in on-chain active addresses.

A bullish indication comes when the orange line moves from under the dotted green line back up into the active address change zone, as it did most lately on June 10, signaling the prospect of a market reversal.

Bitcoin, as per Rekt Capital, a prominent Twitter analyst, is still on track to establish a new all-time peak. For the time being, it’s probably better to just stop glancing at charts and fretting about which way Bitcoin will go. Long-term prospects are bright, since nations such as El Salvador have started accepting Bitcoin as legal cash, and more individuals are becoming intrigued in cryptocurrencies.