Over the past week, Bitcoin has shown strong bullish indicators both technically and on-chain. However, upon reaching a significant resistance level at $24K, the market has seen intense fluctuations between buyers and sellers. The key question now is whether this marks the start of a genuine bull market or if it is merely a trap for unwary traders.
Technical Analysis
The Daily Chart
Bitcoin’s recent upward surge has been stymied by the critical resistance around $24K. The price action has entered a consolidation phase, evident from the large wicks appearing on the candlestick chart.
This pattern suggests that there is a fierce battle unfolding between the bulls and the bears at this pivotal level. The outcome of this struggle will likely dictate the market’s direction in the near term. A breakout above this resistance could lead to a swift upward movement.
On the flip side, the 50-day moving average has recently crossed above the 100-day moving average, a positive signal for Bitcoin’s price from a technical standpoint.
Moreover, Bitcoin has just broken through a long-standing downward trendline, but the momentum of this breakout was insufficient to fully confirm that it is not a false signal.
The 4-Hour Chart
Despite the bullish indicators on the daily chart, the 4-hour chart shows a more cautious outlook. Bitcoin is encountering two critical resistance levels, at $24K and $25K. Currently, the price is hovering around the $23K mark and has formed a three-drives reversal pattern within a bearish ascending flag.
If Bitcoin drops below the lower trendline of this pattern, a short-term correction is likely. However, should the price find support at the trendline, the next target would be the key resistance at $25K. Additionally, a divergence between the RSI indicator and the price suggests that a consolidation phase might soon follow.
On-Chain Analysis
Even though Bitcoin seems to be in the early stages of a potential bull market, the flow of BTC into exchanges has remained moderate. BTC whales, who hold more than 1,000 bitcoins, have yet to significantly move their assets to exchanges.
Miners, a critical group in the Bitcoin ecosystem, also play a key role in shaping the market. The Miner Reserve metric shows that after Bitcoin surpassed the $20K price point, there was a noticeable increase in BTC flows to exchanges, with over 5,500 BTC moved on January 19.
This influx has caused the Miner Reserve metric to drop, indicating that miners are using the recent rally as an opportunity to offload some of their holdings, manage costs, and take profits. If this selling behavior continues, the market could face a short-term period of consolidation in the coming days
