After Meltdown, Bitcoin Needs To Snap Of This Narrow Range To Advance To $38,000

    • Bitcoin sluggishly trades in a narrow range but sentiments show a breakout is around the corner.
    • A surge in on-chain transaction volume in loss often comes before a significant correction.
    • Support at $30,000 remains crucial to BTC recovery, otherwise, there may be a return to $25,000.

    The largest cryptocurrency, Bitcoin, sits in quite an interesting zone between $30,000 and $32,000 following a minor recoil from May’s low of $25,440. A glance at BTC/USD daily chart revealed the vital role the zone played in 2021.

    Note that Bitcoin embraced this support range in January 2021 before lifting to highs slightly below $65,000. The same region provided the much-needed anchorage in June and July ahead of the remarkable run to the record high at $69,044.

    Holders Are Still Selling Bitcoin At A Loss

    The previous week wreaked havoc in the cryptocurrency industry amid the crash in Terra’s native coin LUNA and the network’s stablecoin UST. Pressure mounted on Bitcoin as the Luna Foundation Guard sold nearly $3 billion worth of BTC in a bid to save UST.

    Fear and panic gripped other holders as the price nosedived below $30,000. Despite the support at $25,000, a recovery above $30,000 has been hindered mainly by the rise in transaction volume at a loss.

    Nevertheless, there is an intriguing relation between the increase in transaction volume in loss and Bitcoin price. According to Santiment’s chart below, every time spikes have occurred in this index, Bitcoin reacted with a change in trend direction. With the current spikes being the largest over the past year, BTC’s price is expected to make a considerable recoil.

    Bitcoin Daily On-Chain Transaction Volume In Loss

    How Spikes In On-chain Transaction Volume In Loss Could Speed Up Bitcoin Price Recovery
    Santiment chart

    BTC Price Prepares For A Gigantic Leap

    The daily chart revealed that Bitcoin is on the cusp of a massive breakout. This follows a positive signal from the Relative Strength Index (RSI), which has just lifted from the oversold region. Besides, a bullish divergence is forming above the moving average, implying that buyers are gradually regaining control.

    Support at $30,000 remains crucial for Bitcoin’s price recovery. However, for an uptick above the barrier at $32,000, the Moving Average Convergence Divergence (MACD) may have to confirm a buy signal.

    Traders should be on the lookout for the 12-day Exponential Moving Average (EMA) crossing above the 26-day EMA. The bullish grip will become more solid as the MACD prints its way to the mean line and crosses into the positive area.

    BTC/USD Daily Chart

    How Spikes In On-chain Transaction Volume In Loss Could Speed Up Bitcoin Price Recovery
    Tradingview chart: BTC/USD

    On the other side of the fence, the 50-day Simple Moving Average (SMA) appears to be expanding a bearish divergence from the 100-day SMA. This shows that investors cannot ignore the influence bears still have on the price. Therefore, it would be advisable to proceed with caution even as speculation for gains to $34,000 and $38,000 soar.

    John Isige
    John is a cryptocurrency technical analyst, who looks at micro, macro and fundamental factors affecting market trends.

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