Bitcoin (BTC) has been experiencing a volatile price action since late April, with significant fluctuations in its value. At the time of writing, the cryptocurrency has experienced a 3% decline in the last 24 hours and is currently trading at $28,400. However, it has now settled within an accumulation range of $27,800 to $30,000.
Bitcoin Bulls Take Caution
BaroVirtual from Cryptoquant recently shared his analysis regarding the potential downside targets for Bitcoin. According to the analyst, the bearish divergence of the BTC: On-Chain Summation Index suggests a target of approximately $27.200. A Head and Shoulders (H&S) pattern also indicates a lower range target of $25,000.
The BTC on-Chain Summation Index is a metric that tracks the number of Bitcoin being transferred on the blockchain. When the index shows a bearish divergence, it suggests a decrease in the amount of Bitcoin being transferred, which could lead to a decline in price.
On the same note, Binance, one of the world’s largest cryptocurrency exchanges, received its largest single Bitcoin deposit in the past week. The deposit, made to an address that had remained inactive for four months, came from five separate addresses and totaled over 1,200 BTC, worth over $35M at current market prices.
Arkham, a blockchain analytics firm that tracks cryptocurrency transactions, reported the news. The firm noted that the deposit was made in a single transaction and that the funds were sent to a previously unused deposit address. Will this translate into an extension of the bearish momentum? It remains to be seen.
Moreover, according to Material Indicators, a crypto analytics firm, the recent Bitcoin monthly candle close/open has signaled a potential short-term price correction for the cryptocurrency. The firm’s Trend Precognition A2+ algo flashed a short signal, indicating a potential decline in Bitcoin’s price, as seen in the chart below.
However, according to Material Indicators, the signal is tentative until the candle closes, and a pump above the April high could invalidate it. Additionally, Wednesday’s upcoming U.S. Federal Open Market Committee (FOMC) Federal Reserve interest rate decision could catalyze a significant price move in either direction.
If the Federal Reserve raises interest rates by 25 basis points, it could lead to a stronger US dollar and put downward pressure on Bitcoin’s price. However, continuing to pause or maintain current rates could boost investor confidence and lead to a price increase for the cryptocurrency.
Although the potential downside targets predicted for BTC, evidence suggests that the $27,000 mark could support the cryptocurrency and push back the bears. This level has already demonstrated its resilience as a support floor, holding up well against significant selling pressure since April 21st.
Featured image from Unsplash, chart from TradingView.com