In the last few days we have seen Bitcoin hover around $30k as it failed to break above the resistance zone of $31k-$31.4k on July 13, 2023. However, after seeing the position of Bollinger Bands and on-chain data, we are confident that the market sentiments are still bullish.
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Bitcoin Price History in 2023
The year began with a sideways market in January 2023 when Bitcoin was trading around $16.5k-$17k. Then came a Bollinger Band Squeeze, which took the prices above $23k by Feb 08.
After February, we again saw a sideways market till mid-March. Then came another price rally till $28.5k which ultimately made several institutions rethink their retail crypto strategy. This continued till mid-June when markets first dipped down to $26.5k and then rose as popular investment firms showed their interest in crypto with spot Bitcoin ETFs. This caused prices to move to $30k
The last leg of rally which spiked the prices till $31.8k came as a result of broader rally in response to the Ripple’s partial win in US NY Southern District Court against the SEC. However, prices soon dropped near $30k and by the time of writing this article, they were a hovering up and down near $30k.
Technical Analysis
Technical charts shown above answers the question why prices are ready for another rally.
- The RSI which had been overbought(above 70) since June 22 to July 3, has cooled down and is now trading at the level of 50 which is a moderate level for early bullish markets like the present one and presents scope for further price rise.
- However, exchange based trading volumes of Bitcoin/USDT pair have witnessed low levels since April 2023.
- Price has touched the lower part of the Bollinger Bands which signals a reversal in prices towards upside soon. There are also ripe conditions for Bollinger squeeze, a scenario where low volatility gives rise to a rapid price movement.
On-Chain Analysis
Realized profit shows that Bitcoin holders are selling at a profit which means new investors are buying at higher levels, a bullish signal. There is also a net increase in total number of addresses with balance.
Realized Profit
It displays the sum total of all the profits and losses has been increasing lately. We have used the metric of Realized Profit to show you that new investors are buying at higher and higher prices which show their confidence in Bitcoin’s future price. It also shows that there is a slow entry of new investors into Bitcoin.
To support this claim we can take a look at the Whale purchases in Bitcoin.
- Michael Saylor’s MicroStrategy has recently bought 12,333 Bitcoins($350 Million) between April 29 and June 27, 2023. This purchase increases its hold to 152,222 BTC valued at $4.52 Billion.
Total Addresses With Balance
There has been a net increase of about 5 million addresses that hold some Bitcoin. Total number of active addresses have increased from 42.49 million to 47.35 million from January 18 to July 18, 2023. This supports our realized theory data that new investors are purchasing Bitcoins.
NVT Ratio
NVT Ratio is the ratio of Bitcoin’s network transactions to its market cap. The reason to use NVT ratio is that it clearly shows whether the current mood of the market is bullish or bearish. A bullish market is depicted with a low NPT ratio because both no. of transactions and the price (therefore the market cap) are high.
The current NVT ratio has come down from 77 to 59.72 in the last 4 days which shows network transactions are picking up speed.
Conclusion
We can expect another price move towards the resistance of $31k. However, if a Bollinger squeeze happens, it would help BTC easily cross $32k. In the event that the price goes rapidly down, it would be a good opportunity to buy more.
Disclaimer: The above article has been written from a theoretical perspective and should not be considered as trading advice. Please consult your financial advisor before trading or investing.
