The leading cryptocurrency, Bitcoin ($BTC), has entered a downward trend again after reaching a local multi-month high of over $82,000 last week.
Market analysts say Bitcoin has lost momentum after being rejected from $82,000 and experiencing an 8% drop, and that bulls need to defend critical support levels for an uptrend to occur.
At this point, cryptocurrency data analytics firm Swissblock stated that Bitcoin’s rise has lost momentum, but the current phase signals consolidation rather than a collapse.
Swissblock analysts analyzed that Bitcoin loses momentum after each positive surge, and this contributed to its recent drop to $76,000.
However, analysts maintain a cautious bullish outlook, arguing that unless momentum in $BTC significantly decreases, the primary scenario is consolidation, not a decline.
At this point, Swissblock examined the price momentum indicator, which ranges from “-1 to 1”. They noted that this indicator had fallen from its peak of 0.9 in mid-May to approximately 0.7.
According to Swissblock, as long as the indicator does not fall below -0.5, the market should be considered to be in a consolidation phase.
“…A similar situation occurred in June and July of last year; the momentum retreated from its peak but remained above the -0.5 threshold.”
This allowed the price to consolidate, and at the end of the consolidation period, it reached a new peak.
The same is true for current market conditions.”
What’s Needed for a Bitcoin Rise?
Besides Swissblock, Glassnode also assessed the current state of Bitcoin. Glassnode noted that the upward momentum in Bitcoin has slowed, attributing this to a slowdown in spot demand, decreased ETF inflows, and the liquidation of long positions.
According to Glassnode, despite this weakness, Bitcoin and the overall market structure remain robust.
At this point, analysts noted that $BTC has remained relatively stable above key support levels such as $76,000, and that institutional interest in the futures market is increasing. According to analysts, $BTC and the market are currently being driven more by derivatives trading than by spot-based strength.
In conclusion, Glassnode notes that there is currently no strong spot buying pressure in the market, and a significant increase in ETF purchases or the closing of short positions would be necessary for a return above $80,000.
In this context, according to the firm, it is likely that $BTC will continue to trade in a wide range until the liquidity environment improves and strong spot buying returns.
*This is not investment advice.
