Chart by TradingView
BTC is starting off the month of September on a positive note gaining 7.9% from yesterday’s lows and with today’s attempt in retesting $50k for a potential breakout.
The cryptocurrency appears to be completing the 10-day long consolidation after topping out at $50.5k on August 23rd, 2021.
Leading up to the current attempt to break out, BTC tested key support at the 21-day MA, 21-day EMA, and nearly the 200-day moving average. Continuing accumulation and falling aggregate spot volume helped the largest cryptocurrency hold the critical green zone of support between $48.1k and $46k.
Yesterday’s daily close above $48.1k was a near-term bullish signal as BTC tested this level as resistance and support for nearly 2 weeks.
As we reported yesterday, the hourly bullish divergence signaled a potential local bottom forming with a reversal coming if technicals continued to validate divergence. The bulls managed to continue pushing BTC higher, giving it further merit, leading to the current breakout attempt above $50k.
On-chain metrics continued to show bullish accumulation as spot exchange reserves made another leg down to multi-year lows. Spot exchange net flows registered a drop of 4327 BTC today – a strong signal of accumulation. BTC miner reserves remain steady at 1.84 million BTC with outflows to exchanges (indicating selling) remaining low.
Futures open interest has continued to trend higher with funding rates starting to increase. This signals the market is starting to position long, but not significantly. It’s been impressive to see BTC rally 72% from the lows at $29.2k from July and still see funding rates slightly above neutral. Overall, funding rates have remained around neutral to negative for months during the $30k to $40k consolidation, but have been trending higher and are now above neutral.
With the current funding rate at .03%, it indicates the market is not reaching overextended levels of long positioning. Leading up to $64k earlier this year, the funding rate ranged between .10% to .15% and remained elevated for months, suggesting the market was heavily positioned long, with an increasing risk of downside.
Wyckoff Accumulation, a technical multi-phase, and volume-driven accumulation pattern known to exhaust supply is nearing completion of Phase D. This stage is known as a consolidation phase after the price breaks out of a long trading range, showing signs of strength.
Bitcoin managed to hold near-term support at $46k for almost 2 weeks and is now attempting to push above $50k and $50.5k, potentially confirming the completion of Phase D and the entry into Phase E where price enters a significant rally higher.
The nearly 2-week long consolidation with a slight pullback slowed the 4-hour and daily momentum, but the 3-day and weekly charts remain bullish. It is important for BTC to start pushing above $50k this week and the next week to further validate the largest technical buy signal which flashed 3 weeks ago.
Overall, strengthening fundamentals, technicals, on-chain metrics, and improving momentum make conditions more favorable for the bulls. The bears struggled to push BTC below critical support at the 200-day moving average at $46k, with shorts getting liquidated on today’s breakout attempt at $50k.
It remains to be seen if BTC can successfully reclaim the critical $50k level, but near-term technicals, improving momentum, and bullish on-chain metrics suggest a breakout is likely. If $50k is reclaimed, the bulls will have to push BTC above $50.5k, $51.1k, and the next major zone of resistance between $55k to $58k, where we can identify heavy technical and on-chain resistance. As of now, the bulls have regained control.
