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Bitcoin (BTC) touched a new life line after the recent drop that tested the $25,000 support level. Despite the market being in a state of turmoil due to a lack of high liquidity, this touch to the main support challenged investors’ “wait and see” approach and resulted in the price rising above $26,400, forcing some to turn to the largest cryptocurrency. So, what’s next for BTC? Will the upward trend continue?
Can Bitcoin Price Exceed $28,000?
Bitcoin not only bounced back strongly from the weekly lows around $25,000, but also tested the short-term resistance at $26,400 for the second time since the beginning of September. The upward trend was interrupted due to overbought conditions in the short term and resistance from the falling trend line.
The Stochastic Oscillator suggests that BTC had to retreat to gather momentum and allowed investors who prefer to wait to buy. At the time of writing, Bitcoin, which traded at $25,904 in the last 24 hours, is above the support around $25,844, where the 50-day Exponential Moving Average (EMA) (in red) is located. In the short term, the price staying above this support will play a significant role in considering the resumption of the upward trend by the bulls.
Especially with a buying signal from the Moving Average Convergence Divergence (MACD) indicator, the likelihood of continued gains reaching $28,000 is higher this time. Investors may consider holding their buying positions as long as the blue MACD line is above the red signal line. This signifies a strong momentum that supports Bitcoin for further gains.
A successful break and holding above the falling trend line would be another milestone that indicates the end of the downtrend and the start of a stronger uptrend for BTC, eagerly awaited by analysts. Furthermore, analysts are not convinced that the downtrend in BTC’s price has come to an end. Experienced cryptocurrency analyst Rekt Capital stated that Bitcoin completed the formation of a double top pattern by dropping to $25,000 earlier this week. This also means a move towards lower levels before the bull market, possibly sweeping at $22,000. The analyst used the phrase “Noteworthy but still very early stage, and many things can still change” while sharing his thoughts.
Currently, Bitcoin needs momentum to sustain gains above $26,000, and a potential breakthrough above $28,000 will take the crypto king beyond $30,000. On the downside, losing the support at $25,400 could trigger another sell-off towards $22,000.
Liquidity Issue Continues to Be a Problem
Liquidity in the cryptocurrency market continues to be a major problem since the explosion of the FTX cryptocurrency exchange and overall decline. According to on-chain analysis platform Glassnode, volumes have fallen to historical lows both on-chain and off-chain.
Liquidity congestion is caused by various factors, including concerns about the regulatory environment in the United States. Traders and investors are content with the “wait and see” approach, resulting in low trading activity. Another factor contributing to the low liquidity is the significant amount of cryptocurrency withdrawn from circulation by decentralized finance (DeFi) and staking platforms, which are gaining popularity.
