Bitcoin’s upward momentum has hit a major obstacle as it reaches a key resistance zone, signaling the possibility of a temporary consolidation. On the daily chart, after consolidating around $39K, buyers pushed the price above the psychological resistance of $40K, leading to an impulsive surge. However, Bitcoin faced strong selling pressure when it reached the $44K resistance and upper trendline of the ascending channel, resulting in a 10% decline. Currently, Bitcoin is trading within a range defined by the $44K resistance and $40K support, suggesting a consolidation phase until a breakout occurs.
On the 4-hour chart, Bitcoin achieved its yearly high at $44.7K but failed to establish a higher high, forming a double-top pattern. This triggered selling pressure and a 10% decline. The correction ended at the dynamic support range between the 0.5 and 0.618 Fibonacci retracement levels, aligned with the recent ascending trendline. Bitcoin is expected to consolidate within this range until a breakout happens.
In terms of on-chain analysis, the MVRV metric, which measures Bitcoin’s market cap to its realized cap ratio, indicates whether the current price is overvalued or undervalued. Historically, when the MVRV metric enters the green zone during bearish market phases, it suggests that Bitcoin is undervalued and may mark the bottom of the cycle. Spikes in the MVRV metric above 1 have consistently coincided with significant price surges and bullish market phases. Currently, the MVRV ratio has increased along with Bitcoin’s uptrend from undervalued levels, indicating potential growth and the start of a bullish cycle.
Hot Take: Bitcoin Faces Resistance but Consolidation May Lead to a Breakout
Despite encountering resistance at key levels, Bitcoin’s recent consolidation phase suggests that a breakout may be on the horizon. The price has faced selling pressure after reaching the $44K resistance, resulting in a decline. However, the support at $40K has held strong, creating a range for Bitcoin to consolidate. On the on-chain analysis front, the MVRV metric indicates a potential shift from undervaluation to anticipated growth, hinting at the start of a bullish cycle. As Bitcoin continues to navigate these levels and undergo consolidation, keep an eye out for a breakout that could propel the price higher.
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