Bitcoin seems poised for a technical breakout from its prolonged downtrend, surging from a weekly low of $74,773 to just below $84,000 as of the latest update on Sunday.
A crypto analyst noted that Bitcoin (BTC) is “just hours away from taking initial but critical steps to fully validate a breakout beyond the lengthy downtrend.”
The analyst further indicated that once Bitcoin successfully breaks a technical downtrend, it enters a new phase of upward momentum.
This analysis comes in the midst of a challenging phase for Bitcoin, which has seen a decrease of 22.3% from its peak of $108,786, achieved on January 20.
Despite this decline, on-chain metrics indicate significant accumulation at crucial price points.
Over 40,000 Bitcoin gathered at $79,000
Data from Glassnode reveals substantial Bitcoin accumulation at the support level of $79,000, with roughly 40,000 BTC acquired in that range. Additionally, the market has effectively absorbed a larger batch at $82,080, where around 51,000 BTC had accumulated. These accumulation levels often serve as strong support according to technical analysis principles.
According to Glassnode, Bitcoin’s next critical test lies at $83,500, where another 48,500 BTC is currently holding. Surpassing and maintaining value above this level might enhance its upward momentum.
Another analyst, known as “Merlijn The Trader,” has flagged additional bullish indicators. He mentioned that Bitcoin has broken out of a falling wedge pattern, with bullish divergence appearing on momentum indicators. This combination typically precedes significant price shifts, with the analyst setting a target price of $102,000.
“This is how trends begin,” Merlijn remarked.
In the realm of technical analysis, a falling wedge pattern is recognized as a bullish reversal formation characterized by converging downward trend lines.
When the price breaks above the top trend line, it generally indicates an end to selling pressure and a shift toward buying momentum.
The current technical environment follows a period of significant volatility for Bitcoin, impacted primarily by larger macroeconomic conditions. Nonetheless, the accumulation patterns suggest both institutional and retail investors are viewing price declines as buying opportunities.
On-chain indicators bolster this sentiment, as the supply held by long-term holders has reached unprecedented levels despite the recent price dip. This suggests ongoing confidence in Bitcoin’s long-term value proposition, particularly among investors with a historically low time preference.
If Bitcoin validates the breakout from its multi-month downtrend as analysts anticipate, the next significant resistance levels beyond $83,500 are likely to be at the psychological mark of $90,000 and the milestone of $100,000.