Bitcoin tested the $27.4k support level: Is a local price reversal expected?
May 9, 2023 9:22 am
Over the past few days, Bitcoin has been in a downward trend. Sellers have been putting significant pressure on the price, leading to a retest of the lower boundary of the fluctuation channel near the $27.4k level. The price fell below this level, but buyers managed to defend their positions.
The $27.4k–$28.2k level is a key support zone for BTC/USD, as 1.58 million addresses acquired more than 560,000 BTC within this range. Considering this information, it can be concluded that the asset has retested the lower boundary of the fluctuation range. Therefore, in the near future, we should expect an upward movement of BTC towards the upper boundary of the channel, near the $29.9k level.
Is Bitcoin overheated?
One of the significant reasons for the aggravation of Bitcoin’s downward movement is technical difficulties. As of May 9, most transactions in the BTC network are spamming the block space. All transactions have the same size and fee, which may indicate DDoS attacks.
It is also reported that for the first time in 5 years, the commission for a BTC block has exceeded the miner’s reward. Due to high demand for transaction processing, the commission reached 6.7 BTC, while the miner’s reward was around 6.2 BTC. These facts could not change the situation drastically but could have an impact on market sentiment.
Despite the technical difficulties, Bitcoin is showing bullish signals. The hash rate, address activity, and transaction volume indicate high demand for the cryptocurrency. These processes occur against the backdrop of the strongest reduction in the dynamics of deposit volume changes in all U.S. banks.
Positive statistics from S&P 500 companies could not fundamentally change investors’ attitude towards the situation in the global economy. Bitcoin has become an opposition to the SPX and is now perceived by investors as a protective asset. The approach of a bull market only adds fundamental value to BTC.
Bitcoin correction
Positive fundamental signals do not change the fact that the asset is in a correction phase. The final target for the correction within the upward movement should still be considered the $26k level, where large volumes of liquidity are concentrated.
As of May 9, the asset has retested the lower boundary of the important accumulation zone of $27.2k–$28.2k. The 0.236 Fibonacci level is also located here, from which buyers pushed off to prevent the price from falling below $27k. Despite this, further price declines for BTC should be expected.
Tomorrow, May 10, inflation data will be published. Analysts expect the indicator to remain around 5% and show zero deflationary movement. Meanwhile, the Federal Reserve has raised the rate to 5.25%, and it is highly unlikely that the CPI will not decrease.
If reality turns out to be better than forecasts, expect a strengthening of the U.S. dollar and a decline in Bitcoin, which has an inverse correlation with DXY. In this case, the BTC price will head for a retest of the $27k level, and sellers will try to push even lower.
Conclusion
Bitcoin is correcting within a bullish movement, and the key level here is the $24.6k mark. Today and tomorrow, increased volatility should be expected, leading to significant price movements. It is quite possible that we will see a local move towards the upper boundary of the accumulation range – $28.2k, followed by a repeated decline to $27k, and possibly lower.
The material has been provided by InstaForex Company – www.instaforex.com
Over the past few days, Bitcoin has been in a downward trend. Sellers have been putting significant pressure on the price, leading to a retest of the lower boundary of the fluctuation channel near the $27.4k level. The price fell below this level, but buyers managed to defend their positions.
The $27.4k–$28.2k level is a key support zone for BTC/USD, as 1.58 million addresses acquired more than 560,000 BTC within this range. Considering this information, it can be concluded that the asset has retested the lower boundary of the fluctuation range. Therefore, in the near future, we should expect an upward movement of BTC towards the upper boundary of the channel, near the $29.9k level.
Is Bitcoin overheated?
One of the significant reasons for the aggravation of Bitcoin’s downward movement is technical difficulties. As of May 9, most transactions in the BTC network are spamming the block space. All transactions have the same size and fee, which may indicate DDoS attacks.
It is also reported that for the first time in 5 years, the commission for a BTC block has exceeded the miner’s reward. Due to high demand for transaction processing, the commission reached 6.7 BTC, while the miner’s reward was around 6.2 BTC. These facts could not change the situation drastically but could have an impact on market sentiment.
Despite the technical difficulties, Bitcoin is showing bullish signals. The hash rate, address activity, and transaction volume indicate high demand for the cryptocurrency. These processes occur against the backdrop of the strongest reduction in the dynamics of deposit volume changes in all U.S. banks.
Positive statistics from S&P 500 companies could not fundamentally change investors’ attitude towards the situation in the global economy. Bitcoin has become an opposition to the SPX and is now perceived by investors as a protective asset. The approach of a bull market only adds fundamental value to BTC.
Bitcoin correction
Positive fundamental signals do not change the fact that the asset is in a correction phase. The final target for the correction within the upward movement should still be considered the $26k level, where large volumes of liquidity are concentrated.
As of May 9, the asset has retested the lower boundary of the important accumulation zone of $27.2k–$28.2k. The 0.236 Fibonacci level is also located here, from which buyers pushed off to prevent the price from falling below $27k. Despite this, further price declines for BTC should be expected.
Tomorrow, May 10, inflation data will be published. Analysts expect the indicator to remain around 5% and show zero deflationary movement. Meanwhile, the Federal Reserve has raised the rate to 5.25%, and it is highly unlikely that the CPI will not decrease.
If reality turns out to be better than forecasts, expect a strengthening of the U.S. dollar and a decline in Bitcoin, which has an inverse correlation with DXY. In this case, the BTC price will head for a retest of the $27k level, and sellers will try to push even lower.
Conclusion
Bitcoin is correcting within a bullish movement, and the key level here is the $24.6k mark. Today and tomorrow, increased volatility should be expected, leading to significant price movements. It is quite possible that we will see a local move towards the upper boundary of the accumulation range – $28.2k, followed by a repeated decline to $27k, and possibly lower.
The material has been provided by InstaForex Company – www.instaforex.com
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