Bitcoin price continues to correct, but macro bullish trend remains unchanged

On August 17, along with the rise in gold prices, the price of Bitcoin suddenly rose, breaking through the ascending triangle pattern and rising to $14,450. However, due to the lack of trading volume, the bulls failed to maintain the price above the ascending triangle.

On August 18, the price of Bitcoin started to fall back and fell back into the triangle pattern. Currently, the price of Bitcoin is defending the support of the 20-day moving average ($11,515). This level has not been broken since July 22.

Next, if the price of Bitcoin can rebound from this level again, it shows that bulls are still buying on dips. If the bulls can push the price of Bitcoin above $12,460, it will likely start a new round of upward trend. On the contrary, if the price of Bitcoin falls below the 20-day moving average, it may fall below $11,000 and even further below $10,400.

Let's first analyze why the price of Bitcoin suddenly fell sharply after breaking through the ascending triangle? What impact will such a sharp correction have on the future of Bitcoin?

Judging from the 4-hour K-line chart, although Bitcoin broke through the resistance level of $12,000, it did not convert the resistance level into a support level.

Moreover, when Bitcoin broke through the ascending triangle pattern, there was only a significant increase in volume at the 1-hour level, and no significant increase in volume at the daily level. Therefore, after Bitcoin failed to fall back to $12,190 on January 18, it fell back into the triangle pattern.

In addition, there is still a gap at $9,700 in CME Bitcoin futures. In the past, most of the gaps in CME Bitcoin futures trading have been filled, so this is also an important level that many traders have been paying close attention to. In addition, there is a potential bearish divergence near the gap. Of course, this still depends on whether the price of Bitcoin will fall below the key support level of $11,400-11,600.

Once the Bitcoin price breaks below this support, the bearish divergence will be confirmed and the price is likely to correct further towards the 100-day and 200-day moving averages.

So now, whether the price of Bitcoin can continue to rise depends first on whether the bulls can hold the key support level of 11400-11600. As long as the price of Bitcoin can stay above this range, it can continue its further upward momentum.

On the contrary, if Bitcoin continues to encounter resistance at $12,000 and falls below the key support level of 11,400-11,600, it is likely to trigger a further correction in Bitcoin, and the end point of the correction is likely to be the gap left by CME's Bitcoin futures.

However, once the Bitcoin price experiences a further deep correction and fills the CME trading gap, it means that the Bitcoin price will hit a new quarterly low, and the overall market sentiment may be greatly affected.

We have noticed that a consistent theme throughout the current Bitcoin bull run since June is that the selling pressure across the market has been declining. According to Bitcoin’s on-chain indicators, the current Bitcoin balance in exchange wallets is far lower than the amount when Bitcoin hit a high of $14,000 in July 2019.

According to data, the former exchanges currently hold a total of 2.6 million bitcoins, which is significantly lower than the 2.8 million bitcoins when bitcoin hit its peak a year ago, and also lower than the 2.9 million bitcoins before the bitcoin crash in March.

While the recent pullback in gold may have exacerbated Bitcoin selling pressure to some extent, Bitcoin's fundamentals remain stronger than ever.

Bitcoin's total network computing power (hash rate) has reached its highest level ever, and the mining difficulty will be increased again in 4 days.

The data also shows that the number of addresses holding Bitcoin for up to 52 weeks is rising, which further shows that investors prefer to hold Bitcoin for the long term rather than sell it.

The fact that miners are also hoarding Bitcoin also shows that miners also expect Bitcoin prices to rise, which are good signs of positive market sentiment.