Bitcoin (BTC) has been undergoing volatile price action since late April, with significantt fluctuations in its value. At the time of writing, the cryptocurrency has experienced a 3% drop in the last 24 hours and is currently trading at USD 28,400. However, it has now settled within an accumulation range of $27,800 to $30,000.
Bitcoin Bulls Be careful
Cryptoquant’s BaroVirtual recently shared his analysis regarding the possible downside targets for Bitcoin. According to the analyst, the bearish divergence of the BTC: On-Chain Summation Index suggests a target of around $27,200. A Head and Shoulders (H&S) pattern also indicates a lower target of $25,000.
The BTC on-Chain Summation Index is a statistic that tracks the number of Bitcoins 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 price drop.
Similarly, 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 been dormant for four months, came from five different addresses and totaled more than 1,200 BTC, worth more than $35 million at current market prices.
Arkham, a blockchain analytics company that tracks cryptocurrency transactions, reported The news. The company noted that the deposit was made in a single transaction and the funds were sent to a previously unused deposit address. Will this translate into an extension of bearish momentum? We’ll see that later.
Moreover, according to According to Material Indicators, a crypto analytics company, the recent monthly close/open of the Bitcoin candle has signaled a possible short-term price correction for the cryptocurrency. The company’s Trend Precognition A2+ algorithm issued a short signal, indicating a possible drop in Bitcoin’s price, as shown 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. In addition, the upcoming US Federal Open Market Committee (FOMC) interest rate decision by the Federal Reserve on Wednesday could catalyze significant price movement 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.
While the potential downside targets for BTC have been predicted, evidence suggests that the $27,000 mark could support the cryptocurrency and push back the bears. This level has already proven its resilience as a support floor and has held up well against significant selling pressure since April 21.
Featured image of Unsplash, chart from TradingView.com
