Assessing Bitcoin and the Potential for a Large-Scale Bull Run

Bitcoin price has shown no signs of escaping the consolidation that has been going on for about two months now. This lack of volatility is getting worse each week and as another week draws to a close, investors can expect a small uptrend, but the long-term outlook remains limited to $45,550.

Rolled Markets Rarely Rise

Bitcoin price has been trading between $46,000 and $35,000 for about two months with no directional bias in sight. Every week, BTC rises fast but is rejected and slowly goes down.

Stuck between the daily demand zone ($36,398 to $38,895) and the weekly supply zone ($45,550 to $51,993), Bitcoin’s price is directionless. To make matters worse, the 50-day Simple Moving Average (SMA) at $40,326 and the 100-day SMA at $42,492 push the price even more.

A breach from this range could result in a small move upwards, but the move is capped at USD 45,550. Even if buyers manage to push the price higher, BTC will face the 200-day SMA of $48,550.

Therefore, an advantage for BTC seems unlikely from a technical point of view.

Given the uncertainty in the global markets and the high correlation between the traditional markets and BTC, a crash in the prior will be easily felt by the latter. Therefore, the scenarios where Bitcoin price will trigger a bull run are extremely slim.

BTC Perpetual Futures | Source: Tradingview

While things look relatively limited for Bitcoin price, the short-term chart for BTC shows a potential crack that could potentially spread and lead to a massive crash. About 2.51 million BTC is held by investors referred to as ‘short-term holders’. This category of investors is usually looking for short-term gains and is more likely to sell their stack at the slightest inconvenience.

These holders are often referred to as ‘weak hands’. Since 2.51 million BTC is already held at a loss by these investors, a flash crash could prompt these investors to sell their holdings to avoid further losses.

BT short term holders | Source: Glassnode

Therefore, investors should expect a capitulation event before a stable bottom forms. This move is likely to be where long-term buyers will pile up, which will be the start of another bull run for BTC.

In this case, Bitcoin price is likely to hit the psychological level of $60,000 and eventually scale up to $80,000 where it will hit a new high.

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