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Bitcoin continues to decline, whether the upward trend intact?

    Bitcoin price analysis on August 31

    Bitcoin has seen significant declines in the past two weeks. The downward movement has created a chaotic situation in the market, many people expressed concern for the fate of the leading cryptocurrency. The following analysis will assess whether Bitcoin's uptrend is intact from a long-term perspective.

    Bitcoin may have reached its tipping point

    After a 62% rally, Bitcoin peaked at $ 10,500 on February 13. Since then, the king has dropped nearly 20% and touched a recent low of $ 8,455. The increased selling pressure seems to have scared investors Crypto Fear and Greed Index (CFGI).

    The Crypto Fear and Greed Index (CFGI), or the fear and greed index of cryptocurrencies, is an index that analyzes the emotions of investors in the cryptocurrency market based on various sources, such as volatility. , volume, social networks, surveys, and market dominance indices. These values ​​are combined into a simple number. A value of 0 means “extreme fear”, while a value of 100 represents “extreme greed.”

    CFGI reached 39 (scared) on February 27. This is the lowest value the index has achieved since the beginning of the year as market participants prepare for a potential drop below $ 6,000.

    Crypto Fear and Greed Index. Source: alternative.me
    Crypto Fear and Greed Index. Source: alternative.me

    The current adjustment coincides with a significant reduction in on-chain activity, according to blockchain information and data provider. Glassnode. Glassnode said that over the past week, various on-chain fundamentals have dropped significantly. The volume of USD decreased by more than 18%, the number of raw transactions decreased by more than 2% and the number of wallet addresses and active entities also decreased sharply.

    Bitcoin on-chain fundamentals. Source: Glassnode
    Bitcoin on-chain fundamentals. Source: Glassnode

    Not everything is bad

    Although the price of Bitcoin continues to fall, Glassnode points out that the decline of active entities has “slowed down”. This can be seen as a positive sign that shows a potential recovery in on-chain economic activity and brings hope of price increases in the coming weeks.

    Adding to confidence in the prospect of price increases, the No. 1 cryptocurrency recently formed a “gold cross” on the daily chart. Many prominent analysts in the industry view this technical formation as one of the most reliable reversal patterns. In fact, the fact that BTC fell right at the intersection of the 50 and 200-day moving average increases the probability of continuing its uptrend.

    BTC / USD chart from TradingView
    BTC / USD chart from TradingView

    The general consensus among analysts defines a support area for BTC between $ 8,200 and $ 8,500. This support could prevent Bitcoin from plummeting further. However, investors are well aware of the possibility that BTC may drop below $ 8,000. Such a decline could increase the chances of a stronger retreat.

    Even so, the MVRV Z-Score indicator shows Bitcoin is still undervalued and has more development opportunities before reaching the next market peak, Glassnode asserts.

    Bitcoin's MVRV-Z Score Index. Source: Glassnode
    Bitcoin's MVRV-Z Score Index. Source: Glassnode

    A similar outlook is also shown by Short Term Holder MVRV – an indicator that examines the behavior of short-term investors. The index has increased and remains comfortable above 1 indicating a further step up.

    Glassnode says:

    "Historically, this has been correlated with the uptrend of BTC prices, suggesting basic support for higher prices. Preventing any extreme events that may affect market confidence, this data shows that the growth opportunity for BTC is imminent. "

    Bitcoin's STH-MVRV index. Source: Glassnode
    Bitcoin's STH-MVRV index. Source: Glassnode

    Future

    Rekt Capital – a well-known technical analyst in the cryptocurrency community, posted one posts on a blog called “Bitcoin Halving – everything you need to know”. In particular, the chart was able to determine that 100 days before halving in 2012, Bitcoin dropped by more than 50%. A similar behavior took place 24 days before halving in 2016 – recording a 38% reduction.

    Although there are not any “striking similarities” between these corrections, the current setback has begun at 87 days before the halving this year. At this point, investors must understand the price action that has taken place after each halving. This could act as a way of determining Bitcoin's next destination.

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    According to CryptoSlate
    Translated by ToiYeuBitcoin

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