Chart by TradingView
BTC finished August on a positive note, printing the second consecutive monthly candle higher, completing an increase of 13.6%. This is quite notable for the largest cryptocurrency as the 2018 bear market never saw 2 strong consecutive monthly closes higher.
BTC continues the near-term consolidation after finding resistance at $50k. So far, bitcoin’s price has held the green zone of support between $48.1k to $46k, where the 21-day, 21-day EMA, and the critical 200-day moving average are.
It is important for the bulls to protect the 200-day near $46k, as BTC continues the validation phase of bull market continuation. Overall, the initial selling from $50k did show a slight increase in older coins being sold. Still, since then, the average age of coins being sold has fallen, indicating no trend of whale exit liquidity forming.
Aggregate on-chain metrics continue to show no major signs of selling pressure in the market. BTC miners continue to accumulate, the supply held by long-term holders is at record highs, spot exchange reserves remain at multi-year lows, and the hash rate continues to recover.
The near-term consolidation can be seen as a way to flush out existing leverage between $46k to $50k before BTC makes the next major move. The aggregate volume on spot exchanges has been declining, indicating no major selling is occurring.
At the time of writing, the hourly chart has been showing early signs of a bullish divergence, where price makes lower lows while momentum indicators make higher lows. Although still early, this could show that the consolidation phase might be completed soon. It is important for BTC to hold the recent lows at $46.3k and for the bullish divergence to progress into higher time frames such as the 4-hour and daily chart.
The macro outlook has improved, especially with the Federal Reserve emphasizing the tapering of bond purchases would not immediately increase interest rates and that they would keep rates lower for longer. This is a strong macro tailwind for risk assets, including the crypto market, because a low rate environment strongly benefits risk assets.
With the Fed easing the market into tapering, this could actually increase risk appetite in Q4, setting up for very strong gains in global equities and especially in the crypto market. With BTC entering September, a historically volatile period, market participants continue to watch the critical $50k level for signs of bull market continuation.
As long as BTC remains above the 200-day moving average at $46k, supply in the $46k to $50k continues to be exhausted, with no signs of major on-chain selling pressure, BTC looks positioned to complete consolidation and start retesting $50k potentially setting up for a breakout higher.
