Bitcoin price is currently on the road to recovery after facing a strong bearish attempt to push it below the $100K mark. The selling pressure on the token intensified when it failed to break through the crucial resistance zone between $106K and $107K. This resulted in a 5% drop from the recent highs. However, despite the initial setback, the price of BTC has started to climb again. It is important to note that this upward movement may be short-lived as the local support level below $100K is still holding strong.
One might wonder why Bitcoin appears to be fragile even during a time when accumulation seems to be on the rise. Since the beginning of the year, Bitcoin has experienced significant volatility, reaching new all-time highs twice. The realized profit of Bitcoin surpassed $3 billion in the early days of the year but dropped to around $250 million as the price dipped below $75,000 from its first all-time high at $109,588. However, profits have been climbing once again since the start of May, nearing $1.5 billion, indicating a potential resumption of accumulation.
According to data from Glassnode, the accumulation trend score reveals that most wallet cohorts are transitioning from strong distribution to modest buying. This suggests that every coin sold is finding a buyer. The recent selling pressure was primarily driven by long-term holders (1 year+) who were looking to cash out their significant profits, even at a discount. On the other hand, the buying side has shown less urgency, resulting in a lower willingness to chase higher prices. This has led to a phase of absorption without a breakout, keeping the token in a rotation phase under pressure.
Looking ahead, the price structure of Bitcoin continues to exhibit bearish characteristics, with lower highs and lows on both daily and weekly charts indicating weak short-term momentum. As a result, it is anticipated that the Bitcoin price will test the local support level below $100K in the coming days.
Analyzing the chart, Bitcoin is currently trading within a descending parallel channel after breaking down from a rising parallel channel. The RSI indicator is forming lower lows and highs, suggesting bearish dominance. Therefore, the price is likely to test the local support at $99,737 and potentially bounce back to $104,400 initially, before aiming to enter the rising channel and reach new highs.
In conclusion, while Bitcoin may be facing some challenges in the short term, the overall trend of accumulation and potential for new highs indicate a positive outlook for the future of the leading cryptocurrency. Stay tuned for further developments in the Bitcoin price rally.