Bitcoin (BTC) has spent a month inside a $12,000 price range since March. This period included a brief surge to a new record high of $73,680, followed by a swift decline to a low of $59,630, suggesting indecisiveness among traders about the market’s next direction.
BTC bull market consolidation
From a technical viewpoint, Bitcoin’s rangebound price action resembles a classic consolidation phase that typically follows significant upward trends in a bull market.
In essence, during this phase, some traders are taking profits while others are buying in anticipation of further gains. For instance, the number of Bitcoin entities holding over 1,000 BTC, 100 BTC, and 1 BTC has increased during the consolidation period.
At the same time, the number of addresses with a balance of at least 10 BTC has dropped, indicating that some intermediate holders are either taking profits or redistributing their investments.
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This behavior creates a balanced dynamic between buying and selling sentiments in the short term, leaving the price stuck inside a narrow range. Interestingly, this range looks like a bull flag, characterized by the price fluctuating inside a descending parallel channel.
Bull flags typically resolve after the price breaks above the upper trendline and rises by as much as the height of the previous uptrend.
As a rule of this technical analysis, BTC’s price eyes a short-term rally toward the flag’s upper trendline at around $70,000 in April. A breakout above the trendline, however, will likely push the price toward the bull flag target of around $88,300 by May’s end.
A pullback from the upper trendline, on the other hand, could result in Bitcoin staying stuck inside the bull flag range.
2020 Bitcoin halving fractal
Bitcoin’s current price consolidation phase aligns with its fourth halving, and it resembles the price patterns seen around the third halving in 2020.
Furthermore, in both cases, the daily relative strength index (RSI) is inside the 30-70 neutral zone, indicating stable conditions without extreme bullish or bearish sentiment.
This recurring trend suggests that the halving events, which reduce the reward for mining new blocks, typically influence the market to enter a period of price stabilization as investors adjust to the new supply dynamics.
Bitcoin’s open interest is stabilizing
Bitcoin’s open interest (OI), a measure of the value of outstanding derivative contracts, has experienced a significant decrease from its recent peak.
On March 29, OI was over $39 billion, but it subsequently fell to around $30 billion and has since stabilized at this level. This stabilization indicates that the market is taking a breather after a period of significant volatility.
Meanwhile, Bitcoin’s funding rate has turned positive, hitting 1.95% per week on April 24, though it remains below its March peak of 2.03% per week.
Paired with the stabilizing open interest, this indicates that while traders anticipate a price rise, their trading actions are not aggressive. Simply put, general confidence in current pricing reflects uncertainty about future price movements beyond the short term, leading to flat spot Bitcoin market.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
