This year, for many traders, Bitcoin has become not a source of profit but a source of headache. In January, we saw a continuation of the decline in the BTC price as the price hit a low of 34,000. Then in February and March, we saw a recovery. A return above 40000 gave us hope that Bitcoin would return to its high. But that did not happen. After a successful March, April disappointed many investors. The price of Bitcoin fell from 47,000 to 39,000.
What is the reason for such a fall?
As Glassnode’s report shows, the relationship between futures and spot volume (on-chain vs. off-chain volume) shows that BTC price behavior is caused by speculation created on exchanges. While fundamental data is driving Bitcoin’s price strength, the dominant force in price movement is the exogenous factor that occurs on crypto exchanges, not in the blockchain itself.
However, you should also pay attention to the outflow of coins from exchanges. Bitcoins, worth $134 million, were withdrawn from the exchanges, the second-largest weekly outflow in 2022. Analysts attribute this to the Fed’s aggressive policy aimed at strengthening the US dollar. However, analysts also observe an influx of capital into altcoins, thus there is a redistribution of capital between Bitcoin and altcoins.
What does the chart say?
The BTC/USD pair is trading around the important support area of 40,000-39,000. And as we predicted in previous posts, most likely, we will see the further movement of the BTC/USD pair in the range of 39,000-47,000 if the market does not receive some important news that can change the market.
The BTC/USD pair is facing strong resistance in the 40,500 area. Then it encounters resistance in the 41,300 area. An upward breakdown of the 41,300-41,500 area will allow us to talk about further growth of the BTC/USD pair to the 42,250 area.
If the bears can develop on the Bitcoin price drop and send it below the support of 39,000, we will see a decline to the March low, i.e. to the area of 37,000.