Bitcoin Price Analysis: BTC Approaching $50K With a Solid Weekend Rally
BTC has been showing near-term signs of strength, especially after reclaiming the 200-moving average on the 4-hour chart and holding $47.2k, a key level of support.
What’s notable is that Bitcoin managed to hold support despite global stocks selling off with the dollar rising. Near term, BTC has managed to reclaim the critical 200-day moving average, 21-day, the 21-day exponential moving average, and the 200-moving average on the 4-hour chart. This is quite impressive considering that global stocks have been selling off.
Strong Hands not Selling
The near-term positivity is likely from continuing strength in on-chain metrics particularly with strong hands holding large amounts of older coins while younger coins sell. The market is back in profit according to the adjusted SOPR metric – a positive signal as BTC was testing a break-even point in the 45k range earlier this week.
The open interest was flushed out on the day El Salvador adopted Bitcoin as legal tender, consolidated, and has recently started to trend higher. Funding rates have been neutral to negative throughout the recent recovery, indicating shorts are skeptical of the rally. The more price pushes higher, the more shorts will be pressured to cover.
The Mean Coin Age, an on-chain metric we have been watching closely, continues to make new all-time highs, a strong signal that long-term holders continue the re-accumulation phase and are not selling. Previous cycles with similar behavior have led to significant rallies higher, causing long-term holders to start distributing into strength.
Distribution Expected as Price Rallies
Long-term holder distribution at higher prices, especially above all-time highs, can be expected if BTC completes the bull market continuation validation phase in the coming weeks with a break above resistance between $55k to $58k. Breaking above these levels will likely send BTC towards retesting all-time highs at $64.8k, where there is very little on-chain resistance.
Upon breakout to new all-time highs, we can expect significant upside that will likely encourage some long-term holders to start distributing. Keep in mind, long term holders have historically distributed their holdings when the price is rallying significantly and particularly when older coins are in profit.
The crash to $30k from May to July did not impact long-term holders as they remained in profit. CryptoQuant on-chain analyst Gaah Cordeiro notes that they do not sell at a loss during bull markets. The LTH SOPR metric remained above 1 during the entire $30k to $40k consolidation, confirming LTHs are in profit, which strongly suggests Bitcoin is not in a bear market.
Overall, the trend in fundamentals and on-chain metrics continues to show strength and suggests higher prices, especially in the next few weeks and months. Near term, there are external caution signs such as risk off in global stocks, uncertainty over the Federal Reserve tapering, a rising dollar, and fear of the Evergrande $300B debt crisis.
Despite the near-term pressure, Bitcoin continues to show strength as the strong hands continue to hold and refuse to sell BTC at current prices. If this bullish trend continues, we can expect a potential move towards $50k next week as BTC attempts another breakout.
Read more: https://cryptopotato.com/bitcoin-price-analysis-btc-approaching-50k-with-a-solid-weekend-rally/
Text source: CryptoPotato
