Bitcoin Rangebound Since June, Breakout Incoming? (BTC price analysis)

The crypto market continues to go through a phase of uncertainty and low volatility along with steady price action. Bitcoin is currently trapped in a range, and the direction it takes to break away from it would determine the medium-term direction of the cryptocurrency.

Technical analysis

By Shayan

the daily chart

Despite the multi-month downtrend line acting as significant resistance, price broke through and formed a pullback. However, at the moment, the bullish momentum is not promising as there is a substantial lack of demand in the market.

Along with the waning upside momentum, the price is facing two major resistances; the 50-day moving average at the $20K mark and the 100-day moving average at $21.1K. Bitcoin must break through these crucial resistance levels with great speed to start breaking above the $25K level of significant sentimental resistance.

Ultimately, with regards to market sentiment and declining momentum, price will most likely be rejected from these vital levels and experience another drop.

btc_price_chart_10101
Source: TradingView

The 4 hour chart

On the 4-hour time frame, the price has been stuck in a static range between the $21K level and the $18K level for quite some time now. Meanwhile, Bitcoin has been forming a bearish wedge pattern (as shown in the chart below).

The price formed a double top pattern, was rejected from the $20.5K resistance level and is now testing the lower threshold of the wedge.

In the event of a drop, the market would target the $18K essential support level, which may break and drop further. On the other hand, the upper border must break to the upside to invalidate the bearish wedge.

In conclusion, the multi-week downtrend line is currently the main barrier in BTC’s path towards the $21.5K and $25K levels.

btc_price_chart_10102
Source: TradingView

sentiment analysis

Estimated leverage ratio

The Exchange Netflow metric has printed a relatively higher volume of outflows from exchanges in the last week. Although these may have been exchange-level wallet restructurings, the lack of positive sentiment caused them to spread market activity.

The chart below illustrates the Estimated Leverage Ratio metric along with the Funding Rate. Along with the significant outflows, the Estimated Leverage Ratio metric has also reached an all-time high, indicating that traders are using higher leverage with high risk in the futures market.

However, the absence of new retail investors demonstrates the dominance of derivatives market activity. Despite this week’s substantial FX outflows and high leverage ratio, the relatively “neutral” funding rate appears to be the reason price movement has yet to establish a direction.

Therefore, the market is potentially going through a prolonged range phase followed by dollop price action.

btc_price_chart_10103
Source: Crypto Potato
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Cryptocurrency charts from TradingView.

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