BTC/USD Price Analysis – April 06, 2023
Daily Price Outlook
Bitcoin, the world's leading cryptocurrency, has experienced a rollercoaster ride since the beginning of 2023, surging over 70% in the first quarter and outperforming assets like physical gold and US stocks. However, the upward trend appears to be losing momentum, as BTC recently fell more than 2% to $28,069.54, while Ethereum also dropped 1.15% to $1,890.98.
The ratio between Bitcoin's (BTC) daily trading volumes in spot and derivatives markets has dropped to an 11-month low, indicating renewed speculative activity in the crypto market. The ratio has plunged nearly 80% in three months, hitting a low of 0.117, last seen on May 16, 2022, according to data from South Korea-based blockchain analytics firm CryptoQuant.
This decline, which coincides with a 70% year-to-date increase in Bitcoin's price, suggests a heightened risk appetite in the crypto market and potential for price volatility.
The decrease has been particularly sharp since Bitcoin first encountered significant resistance above $28,500 on March 21, indicating that speculators have recently entered the Bitcoin market at a faster pace compared to retail investors and long-term holders.
Markus Thielen, head of research and strategy at Matrixport, noted that the theory of the 2023 crypto rally being driven by diversification away from the U.S. dollar and associated bank credit risk may be on shaky ground if the rally was purely driven by an increase in leverage, as evidenced by the falling volume ratio.
BTC/USD – Technical Outlook
Bitcoin's price attempted a crucial upside break above the $28,800 resistance area but struggled to gain momentum above this level, leading to a downward reaction.
The price fell below $28,400 and $28,200 levels as bears pushed it below the $28,000 support. It reached a low of $27,813 before bulls stepped in. Bitcoin's price is currently consolidating above the recent low and trading close to $28,000.
The next significant resistance is around the $28,300 zone, close to the 50% Fib retracement level of the downward movement from the $28,792 swing high to the $27,812 low. If Bitcoin fails to surpass the $28,400 resistance, it could experience another decline. Immediate downside support is near the $27,800 zone.
The following major support is close to the $27,550 zone or the recent low. A downward break below the $27,550 support could send the price towards the $26,500 support area.
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