BTC Makes Bullish Return Amid Regulatory Tensions, But Lacks Confirmation

BTC Makes Bullish Return Amid Regulatory Tensions, But Lacks Confirmation


  • Bitcoin price is taking the first step to recovery but it needs strong confirmation that after the $19,539 reversal it will reach a support floor.
  • After a successful reversal, investors can expect a rise to a median hurdle at $20.737.
  • A daily candlestick close below $17,593 will invalidate the bullish theory for BTC.

Bitcoin price has produced three consecutive lower lows since Sept 7, but at the same time, the Relative Strength Index (RSI) is showing a positive rise which indicates a lack of fundamental downward strength. This lack of confirmation points to a possible reversal on the horizon, and BTC is starting to climb, but it still faces one of the biggest hurdles and only by overcoming it will it confirm a short-term system shift in favor of the bulls.

Stablecoins are under fire from US security guards

While technicians struggle to develop a consistent bias, US regulators have taken a serious approach to excluding algorithmic stablecoins after the recent Terra/LUNA crash sent shockwaves through the cryptocurrency ecosystem.

The House Financial Services Committee (FSC) has targeted stablecoins such as DAI, FRAX and USDD and proposed a bill that could impose a two-year ban on these assets. The reason for this law can be traced back to the collapse of the Terra-LUNA ecosystem in the second quarter of 2022.

Rep. Warren Davidson stated in this regard,

There is an outside chance that we will find a way to reach consensus on a stable currency bill this year.

While there is a war on stablecoins, Tether, one of the largest issuers of stablecoins, has come under fire this week as US Judge Catherine Polk Faila in New York ordered the company to release documents confirming that all issued USDTs are backed by US dollars.

Regardless of the regulatory chaos, BTC is slowly trying to regain momentum and needs to overcome one critical hurdle to trigger its upward trend.

Bitcoin price and technical problems

BTC price is in a tight corner from a technical point of view. After forming another swing low at $18,804, BTC price is up 7% and is currently grappling with a resistance fund of $19,405 to $19,599. August lows at $19,539 are key to the outlook, as we shall see.

There are two things that investors should pay attention to:

  1. The $19,539 barrier has flipped to the support level.
  2. The RSI maintains above the support box from 43 to 46 as BTC flips the aforementioned level.

If these two conditions are met, the bitcoin price will be primed for a higher move. In such a case, BTC will face a major resistance confluence consisting of the $20,737 resistance level along with the descending trend line connecting the swing highs since May 31.

Overcoming these hurdles will not be easy, but it will be necessary to open the way for a retest and sweep the previous weekly high at $22,850.

After this level, market participants should shift their focus to the August high of $25,200. This level is significant as it contains the mid-point of the range from $32,427 to $17,593 at $25,010. Retesting this level could create a local top for bitcoin price.

BTC/USDT 1-Day Chart

BTC/USDT 1-Day Chart

IntoTheBlock’s Global In/Out of the Money (GIOM) model supports this bitcoin price rally. This indicator shows that the immediate support level, extending from $9,600 to $18,470, is not as strong as the resistance level but is capable of producing a rebound.

However, the immediate hurdle extends from $19,405 to $28,954, with approximately 5.05 million addresses buying 3.1 million bitcoins at an average price of $22,095 “out of cash.”

This resistance block aligns with the stated goals from a technical perspective, adding more credibility to the rebound potential.

However, investors should note that moving to said group may lead to selling pressure from those underwater owners who want to break even.

BTC GIOM

BTC GIOM

Another interesting metric promoting this bullish notion is the volume of the chain, which has been in a steady uptrend. After dropping to 16.39 billion BTC in the first week of July, it has steadily risen to what it is currently, 41 BTC. This rise indicates that more investors are interacting with the BTC blockchain, and thus there is an increase in the capital inflow, which is a bullish sign depending on the market structure.

BTC volume on chain

BTC volume on chain

As things look for the bitcoin price, investors should be prepared for a chainsaw scenario that could include a sweep of the June 18 swing low at $17,593. This move will be a good buying opportunity if BTC recovers and continues above this level quickly.

However, closing of the daily candle below the mentioned level which turns it into a resistance level will invalidate the bullish theory. In such a situation, Bitcoin price could drop to $15,500, which is the next stable support level.

If selling pressure continues to rise, the large cryptocurrency could lead to selling as high as $13,500 and $11989, where a macro bottom could form for a bear market.



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