After days of battling to contain further losses, Bitcoin (BTC) bulls have gained some ground stabilising the price below $17,000. In the meantime, investors are looking for signals that can trigger Bitcoin’s price movement in either direction.
Bitcoincenter’s rainbow price chart is one of the gauges leveraged by the market to determine the possible next Bitcoin price action. The tool uses color bands that follow a logarithmic regression and reviews past performance to provide a potential insight into its long-term movements.
Interestingly, as of November 19, the Bitcoin indicator dropped below the ‘Basically a Fire Sale’ level, represented by the color blue for the first time; the level is the lowest band on the Bitcoin rainbow chart.
From the chart, Bitcoin has been stuck in the ‘Basically a Fire Sale’ zone for several weeks. Historically, Bitcoin last hit the level in March 2020, where the asset consolidated before rallying towards last year’s bull market.
Interestingly, the indicator remains bullish for Bitcoin’s long-term prospects highlighting that the asset’s price would likely hit a six-figure value in the next two years. At the same time, the chart hints at possible Bitcoin’ HODL’ status at the end of the year.
Bitcoin downtrend exhaustion
The indicator’s breach on the downside comes after Bitcoin appeared to exhaust its downward momentum partly triggered by the FTX cryptocurrency exchange collapse. At the current price, Bitcoin has found a support level at $16,200, and breaching the position will likely usher in more correction.
Indeed, the possibility of a further correction towards $10,000 was highlighted recently after Bitcoin flashed its strongest sell signal since 2021. Overall, Bitcoin’s price has been stuck in a downtrend with unsuccessful attempts to break past $17,000 amid low buying pressure as liquidity concerns prevail.
With Bitcoin finding some stability, the focus previously turned on the bull’s potential to trigger a rally toward $18,000. In recent weeks, the $18,000 level emerged as a crucial support position for the flagship cryptocurrency.
Bitcoin technical analysis
From a technical analysis perspective, Bitcoin daily gauges are leaning towards the bearish side, with a summary pointing towards ‘sell’ at 10. Moving averages suggest a ‘strong sell’ at 14 while oscillators are ‘neutral’ at nine.
At the moment, Bitcoin was trading at $16,500 by press time with losses of less than 1% in the last 24 hours.
Overall, Bitcoin’s underperformance will likely be cleared once the ongoing crypto market uncertainty stemming from the FTX saga stabilises.
Despite most trading platforms publishing their proof of reserves, on-chain data indicates an exodus of Bitcoin from exchanges to self-custody wallets. One area of focus is the ability of crypto exchanges to assure users that their funds are safe.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.