Liquidations of long positions managed to push the bitcoin price below the 21-day and the 21-day EMA. The technical momentum on the daily timeframe has been weakening with the current sell-off.
The risk in the near term appears to be high, but this might also be a good long-term buying opportunity. The overall trend in fundamentals and on-chain remains bullish. We saw some light distribution from older coins and miners, but there’s still no sign of more aggressive selling.
The previous weekly close was above $64.8K, and it was a bullish signal, but follow-through to the upside is also required for validation.
The long liquidations and the selling pressure pushed the BTC price below $64.8K, which increases the near-term downside risk.
BTC is currently sitting below $64.8K on an intraweek basis, and it’s important to see the bulls push it back above that level before the weekly close. The higher timeframe charts remain bullish as the price is making consistent higher highs and higher lows.
There’s major support between $58.3K and $53K. These levels are confluent with strong technical and on-chain support. The price is currently testing the 50-day MA, which is a key level to hold on the daily chart. Closing below it increases the risk of near-term downside towards $57.6K, $57.1K, $56.8K, $55K, and $53K.
It is critical for the bulls to protect $53K as this level determines the larger technical structure on the chart. If we see aggressive distribution from long-term holders and miners with the price falling and closing below the key support, the probability of further downside risk will increase significantly.
There has been some light distribution from LTHs and miners but not as aggressive as in later phases of bull markets. This suggests that the current bull run has plenty of upside to go and is likely to extend into early Q1 2022.
The mean coin age has been slowly trending higher but shows no signs of flattening. This tends to occur before a trend of distributing begins, where LTHs and miners start to consistently distribute as the price rises.
Spot exchange and all exchange reserves have been consistently trending lower throughout the year, making new multi-year lows even with multiple drawdowns this year.
This suggests that investors are buying BTC and removing it from exchanges into cold storage, adding to the supply exhaustion. This makes it increasingly difficult for large institutions looking to build billion-dollar positions on spot BTC exchanges where the supply remains low.
Quite notable, the STH SOPR has dipped below 1.0, which indicates short-term holders realizing losses. This suggests buyers who rushed in when BTC pushed above $65K are now panic-selling at a loss. At the moment, this pullback has been driven by long liquidations and weak hands realizing losses.
Although the near-term technical momentum has weakened, the overall trend in fundamental and on-chain remains firmly bullish, making this pullback a favorable buying opportunity for long-term investors.
LTHs and miners are distributing lightly and not aggressively. As long as the bulls protect the mid-to-low $50k’s and older coins go back into holding or accumulating, the bull market is likely to continue and even extend beyond 2021, which opens the door to further upside for BTC.
For now, we have to see it hold the 50-day MA and where the price closes for the week relative to the previous all-time highs at $64.8K.