Oct 29, 2022
VOT Research Desk

Market Insights, Considerations & Analytics

After forming a positive divergence during the previous month, the price of bitcoin now initiates a bullish breakthrough.

Technical indicators and on-chain measures suggest a probable Q4 rally that might drive Bitcoin to $28,000 or higher.

If BTC breaks through the $18,981 support level on a weekly chart, my upbeat forecast will be rendered incorrect.

The price of bitcoin is responding favorably to the optimistic occurrences that have been occurring over the past few weeks. When seen through the prism of Bitcoin’s past results in Q4s spanning the last decade, a recent breakout might represent the beginning of a sustained rise up.

A table with the average return of the price of Bitcoin throughout the course of the different quarters since 2009.. The average return in Q4 was 27%, which is higher than Q2’s 21% average return.

While financial success cannot be relied upon to accurately foretell the future, if the pattern repeats in 2022, venture capitalists may witness an abrupt move to the northward over the next two months.

On the three-day chart that was created between June 30 and October 25, the price of Bitcoin showed a bullish divergence. This specialized development happens when cost declines are not reflected in that frame of mind in the Overall Strength Record (RSI), a famous energy pointer.

This kind of RSI non-confirmation usually means that bearish momentum is losing strength, but it can also mean that a market reversal is coming. Bitcoin cost at last saw a gigantic breakout on October 25, bringing about a 9% rise in about 24 hours. After this, the price of bitcoin experienced a brief pullback to support levels at $19,850 and $19,650. These levels could serve as key accumulation zones for the subsequent leg higher, which could propel bitcoin to the psychological $25,000 level.

BTC’s journey will pivot at the $25,000 hurdle, which marks the midpoint of the 45 percent move that took place between May and June.If this resistance level is turned into a support floor, it will signal a bullish resurgence and send the price of Bitcoin to the next important area, between $28,000 and $29,000.

Since the Chicago Mercantile Exchange (CME) Bitcoin chart has price action gaps at these levels, as previously mentioned, the platform remains closed on weekends. Historically, these inefficiencies have been rebalanced by the big crypto, making the $28,000 to $29,000 range a good place to book profits.

This Bitcoin price rally could continue to the psychological level of $30,000 in a wildcard scenario, bringing the overall gain to 51%.

The Supply on Exchanges on-chain metric reassures buyers, despite the fact that this outlook may initially appear overly optimistic. Contrarianly, the metric works with a fall in supply indicating optimism and a rise: bearish. This is because investors typically first move their Bitcoins from more secure wallets to exchanges before selling them off. The supply of BTC on exchanges decreased from 1.92 million to 1.6 million between June 13 and October 27.

This drop of 16% is positive because it shows that investors are confident and that fewer holders are looking to sell their holdings.

Although the 9 percent increase in Bitcoin price this week was impressive, it is unsustainable in the short term. Investors use the Short Term Holder Spent Output Ration, or STH-SOPR, to determine whether they are selling their holdings for profit, loss, or break-even.

On the off chance that the STH-SOPR is more noteworthy than 1, the momentary holders are selling at a benefit, which signifies an expansion in selling pressure and could set off a negative inversion.

This on-chain indicator is currently above 1, indicating a potential pullback.

The 50-day and 30-day exponential moving averages (EMAs) at $19,847 and $19.640, respectively, on the one-day chart are potential points at which the price of Bitcoin could retest.

Hence, gathering at these levels could yield greatest increases assuming BTC at last arrives at its objective of $30,000.

The bullish thesis for Bitcoin would be invalidated if the point of control, also known as the highest volume traded level for 2022 at $18,981, were to be broken, even though things are looking up for the price of Bitcoin. A further crash as a result of this development could send the big cryptocurrency plunging to the swing low of $17,593 on June 18.

However, buyers have a second chance to enter, accumulate BTC, and possibly initiate a recovery here.