Bitcoin’s recent upward momentum encountered resistance at the significant $37K mark. Despite breaking this level, the market entered a consolidation phase, with the price oscillating between $37K and $35K. A breakout from this critical range will be pivotal in determining Bitcoin’s next move.
The Daily Chart
On the daily chart, Bitcoin’s substantial uptrend lost momentum after breaking the $35K resistance zone and the middle trendline of the extended ascending channel. This transition has led to a consolidation phase, with the price now confined within a key range: $37K resistance and $35K support. Bitcoin’s future movement depends on whether the price breaks out of this crucial range.
Although several bullish signals indicate growing demand, a short-term consolidation correction with minor retracements remains the most likely scenario. Initial support for buyers is expected at the middle boundary of the ascending channel and the $35K support zone.
The 4-Hour Chart
On the 4-hour chart, Bitcoin’s price movement slowed down near the $35K resistance and entered a consolidation phase. After breaking through this resistance, reaching $37K, the price formed an ascending wedge pattern. Attempts to surpass this level encountered strong selling pressure, resulting in a rejection.
The presence of an ascending wedge pattern suggests a potential price reversal, while the bearish divergence between the price and the RSI indicates the likelihood of a short-term retracement. If sellers take control, a long squeeze could push the price below the ascending wedge pattern. Key support levels in such a scenario include the 0.5 Fibonacci retracement level at $32,300.
Bitcoin’s recent strong uptrend has been significantly influenced by the futures market. To sustain this upward movement, it is vital for the futures market to maintain favorable conditions.
The 30-day moving average of the Bitcoin funding rate is a key indicator for assessing sentiment in the futures market. Positive funding rates reflect the dominance of long-position traders, who are willing to pay funding fees to short traders. During Bitcoin’s significant price surge, the funding rate metric showed a strong uptrend, indicating robust buying interest in the futures market. This aligns with the recent market uptrend, suggesting that most participants are positioning themselves for further price appreciation.
However, an overheated futures market could result in a long-squeeze event. A slight price rejection may trigger a short-term cascade, causing the liquidation of long positions. Therefore, prudent risk management strategies are essential to navigate potential fluctuations in market conditions.
