Bitcoin Taking A Break Before Next Rally? What Do We Know?

Since the launch of Spot ETFs, we have seen Bitcoin trending down below $40,000. When market is looking forward to the to-be-approved Spot-ETFs, it has helped Bitcoin to gain momentum notably from mid-October.

On 09 Nov 2023, we saw Bitcoin reaching a high of $37,978. But over the next 9 days, it start to trade around the $38,000 resistance mark, with negative divergences intensifying on smaller timeframes.

We might be seeing Bitcoin trying to stay above $39,000 which is the new resistance level. So why is Bitcoin behaving this way when market is expecting it to surge after the approval of Spot ETFs?

In this article, I would like to share what I will be looking at and what might happen when Bitcoin could be having a break before the next surge.

The crypto market behaviour is very emotional. People tend to get greedy when the market is rising which results in FOMO (Fear of missing out). Also, people often sell their coins in irrational reaction of seeing red numbers.

This is why Fear and Greed Index could be used to save us from emotional overreactions. Actually, there are 2 simple assumptions that we can follow.

Extreme fear can be a sign that investors are too worried. That could be a buying opportunity.

When Investors are getting too greedy, that means the market is due for a correction.

As of current, the current sentiment of the Bitcoin market is neutral at 48. But I would tend to look into the daily index.

If we were to see how the Fear and Greed Index have been moving especially over the last 2 weeks, we can see that it is actually coming down from above 70. This mean that investors are getting worried, this could mean a buying opportunity, if we would like to wait for Bitcoin next rally.

I would continue to monitor as we could see some opportunity soon.

Over the past 12 months, Bitcoin has significantly rebounded from its nosedive (-77.57%), recovering slightly more than 38.2% of the bear market.

The classic 38.2% Fibonacci Retracement represents the minimum response to a preceding price movement. In other words, Bitcoin is alive, but there is still a considerable journey ahead until it reaches its all-time high at USD 69,000!

Since the low on November 21st, 2022, there has been an impressive recovery of around 145%. However, compared to previous recoveries, this one appears relatively modest. Nevertheless, when juxtaposed with stock markets and precious metals, Bitcoin’s recovery unmistakably outshines all other sectors, proving to be both clear and spectacular.

The next plausible price target would be the 61.8% Fibonacci Retracement at USD 48,555. Given the overbought conditions on the weekly chart, a direct surge to that level would indeed be a formidable undertaking.

Nevertheless, considering the current enthusiasm surrounding Bitcoin ETFs, a continuation of the rally, more or less directly, must be accorded a significantly elevated probability. The below chart could turn bullish as long as Bitcoin can defend its breakout above $31,800.

A multi-week breather between approximately $39,000 and $41,000 could serve as a launching pad towards $48,000 to $50,000. But to go beyond $50,000 in the next six to twelve months might be highly improbable.

We could take advantage of possible substantial correction wave, giving us considerably more favorable entry points in days to come.

Another way to look at is the holdings by sharks and whales, sharks holdings is between $1k to $100k, and we can see that it is currently at around 16%, in order for Bitcoin price to surge, we need to see a higher percentage, which mean sharks are buying more into BTC.

Similarly, the holdings by whales is on the low side, with less than 1% as of current, this suggest that investors including institutional are not buying into Bitcoin. They might be expecting another correction to happen.

So I will be monitoring this closely as this should give us quite a clear indication on how Bitcoin would be trading.

Based on what I have just shared, we could see that the Spot Bitcoin ETFs flow seem to suggest the same, there have not been much flow on the Bitcoin by these ETFs despite high volume of trading for them.

Another way to look at would be the flow should be increasing for the Spot ETF, hence, driving Bitcoin price up.

Based on how Bitcoin is trading, I would think that it is taking a break before the next rally. Investors might be holding out and wait for a correction for entry to DCA.

Or institutional could be waiting for a best price to load up, but for us as retail investors, we might want to monitor through Fear and Greed Index, Bitcoin addresses holdings and Spot ETF flow to help us to take a good position.

Appreciate if you could share your thoughts in the comment section whether you agree that Bitcoin is taking a break before its next rally?

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.