Bitcoin has hit a temporary standstill, trading between $90,300 and $92,000 after a notable rebound from recent lows of $80,000 earlier this month. This consolidation phase raises questions among traders regarding Bitcoin’s potential trajectory, especially with weakening trading activity raising fears of another significant decline.
The momentum, although still upward in the short term, is faltering amidst a sharp decrease in both spot trading and on-chain transfer volumes. Analysts from Swissblock indicated that the recent plunge below the yearly open price of $93,300 signified a significant shift in market dynamics, suggesting that reclaiming the $94,000 to $95,000 bracket is paramount for confirming a renewed upward trend.
Resistance remains strong at the $92K to $95K zone, primarily due to the accumulation of approximately 500,000 BTC by investors in this range, according to Glassnode’s cost basis distribution map. The prevailing sentiment is that unless a robust demand returns, this accumulation could hinder further upward momentum, making it difficult for Bitcoin to break through. Should Bitcoin breach this resistance, the next substantial supply zone to watch is between $100,000 and $108,000.
Moreover, if Bitcoin can surpass the $97,000 to $98,000 zone, identified as the final barrier before targeting the big $100K mark, the outlook could become significantly more bullish. Notably, trading futures data are beginning to show encouraging signals that hint at a potential market recovery.
Despite the price rise, trading volumes have declined dramatically, highlighting concerns over sustained engagement within the network. The seven-day moving average of on-chain transfer volume has plummeted by 20% to roughly $87 billion, indicating reduced activity among market participants. Concurrently, daily spot trading volume is resting at $12.8 billion, revealing levels considerably lower than those witnessed earlier in the current bull cycle.
This lack of volume accompanying Bitcoin’s rise past the $91,000 mark suggests weaker speculative interest, which could imply that investor confidence is still in the process of being reestablished. Consequently, the prevailing price range could either persist or experience downward pressure if critical support levels crumble.
Market participants are now keenly observing for a resurgence in trading volume, a factor crucial for substantiating any breakout potential. If buying activity surges, reminiscent of the period between May and July when Bitcoin rallied by an impressive 32%, reaching a new all-time high near $123,000, the path may be cleared for a similar rally. However, without a significant increase in volume, Bitcoin may remain ensnared within its current range as cautious traders await further confirmation of market sentiment.
The market’s ability to energize and maintain engagement will likely dictate Bitcoin’s next maneuvers as it seeks to convert resistance into support and reignite bullish momentum.
