BTC’s everyday price action leaves a lot to be desired for bulls. At this moment, there are many signs of a huge turnaround. Following the trend of the last six or more months, the present factors keep placing pressure on the price of Bitcoin. These are constant concerns of prospective strong cryptocurrency regulation and risk-off solid sentiment because of a global and US recession possibility. Also, geopolitical concerns linked to Ukraine, Russia, and the weaponization of high-demand natural resources EU import. Learn more about the importance of cryptography in Bitcoin.
In combination, such challenges have made high-volatility assets less than alluring to institutional investors, and the joy seen during last year’s bull market has hugely dissipated. So everyday price action is not motivating. Yet seeing the longer metrics duration gauging the price of BTC, investor perceptions and sentiment of valuation present few interesting data points.
The current market scenario
BTC’s price pushes against a long-term descending trend line on the daily and weekly timeframes. A primary momentum indicator that reflects two standard deviations above and below a simple moving average, the Bollinger Bands, are beginning to narrow simultaneously.
Price trading at long-term resistance typically indicates a solid directional move and tightening in the bands naturally occurs before a directional movement.
A quick comparison of the relative strength index (RSI) with BTC’s longer-term price action reveals that purchasing when the RSI is deeply oversold is profitable. This is because of the sell-off between March 28 and June 13.
A price-agnostic view of Bitcoin and its market structure would suggest that now is an excellent time to accumulate, despite the dire situation in the immediate future.
Let’s now compare Bitcoin’s price movement over the past several years to the RSI to see if any exciting dynamics emerge.
The chart speaks for itself. Naturally, there is a possibility of an additional downside, and numerous technical and on-chain analysis indicators have not yet confirmed a market bottom.
The buy wall at $18,000 may be absorbed and turn into a bull trap, as some analysts have predicted a drop to between $15,000 and $10,000.Aside from that, for brave enough to take one swing, enhancing position size in response to one oversold weekly RSI. It produced positive results.
The MACD oscillator is yet another intriguing metric that can be observed over an extended period. Even though MACD has moved above the signal line, it is still seen in past untested territory. It is similar to how this RSI became very oversold when the BTC price fell to almost $17,600.
The histogram has turned positive. Some traders interpret it as an early sign of a trend reversal. However, given all of the crypto’s macro challenges, it should not be heavily relied upon in this situation.
The fact that the RSI and MACD are moving in the opposite direction while the price of Bitcoin is painting lower highs and lower lows on the weekly chart is interesting to me. A bullish divergence is a term for this. The confluence of multiple indicators suggests that Bitcoin is undervalued from the technical analysis perspective. The bottom will never look like to be in. A slew of non-crypto-specific issues continues to weaken BTC’s price and the market. A further decrease of 48% from BTC’s current value of close to $20,000 is a drop to $10,000.
Conclusion
An on-chain data point that shows exciting data is the metric of Reserve Risk. Hans Hauge created it. The chart shows Bitcoin investors’ confidence. Also, its contrasts against the BTC spot price. When investors’ belief is high, but the cost of Bitcoin is low. The risk to reward or BTC attractiveness versus the chance to buy and hold Bitcoin enters the green zone.
Reserve Risk moves into the red area when the investor’s confidence is low, yet the price is high. As per the historical data, create a Bitcoin position when it enters the green zone. It has been an excellent time for establishing a position. As of 30th September, Reserve Risk is trading. It is at its lowest measurement and outside all green area boundaries.
