Bitcoin price analysis (2-8 August): range intact but bulls have an edge
Bitcoin could attract buying at lower levels and challenge $42,615.20 again
Bitcoin rallied for 10 successive days from 21 July to 30 July, its longest winning streak since 2013, according to Coindesk. The sharp comeback in bitcoin has prompted comparisons with its 2013 bull run.
Dan Held, director of growth marketing at Kraken, said in a blog post that bitcoin’s price action in 2021 is “eerily similar” to 2013, when the biggest cryptocurrency “started 2013 at $13, had a spike to $260, then retraced to ~$80 for nearly 6 months until the winter, when it surged again to ~$1,200”.
If the second half in 2021 resembles the bull run in 2013, investors may be in for a huge party.
Crypto analytics firm Santiment said in a tweet on 29 July that whales holding between 100 and 10,000 bitcoin have bought 130,000 bitcoin in the past four weeks.
On more positive on-chain data, market analyst Will Clemente pointed out Bitcoin outflows of 63,711 from exchange balances, which dropped to their lowest level since late 2018.
Traders should be careful of on-chain data because this massive outflow could be an internal move by exchanges.
That does not mean institutional interest is waning. MicroStrategy CEO Michael Saylor said recently that the company, which holds more than 105,000 bitcoin, intends “to continue to deploy additional capital into our digital asset strategy”.
Is the sharp recovery in bitcoin an indication of the start of a new uptrend, or is it a bear market rally? Read our Bitcoin price trend analysis to find out.
Bitcoin price technical analysis: weekly chart
Bitcoin’s price extended its recovery by 12.5% last week to close at $39,849.20. Although the price had risen to $42,615.20 during the week, higher levels witnessed profit-booking as seen from the long wick on the candlestick.
The 20-day exponential moving average (EMA) has flattened out and the relative strength index (RSI) is near the midpoint, suggesting a balance between supply and demand.
If bears pull the price below the 20-week EMA, the BTC/USD pair could drop to the 50-week simple moving average (SMA) and extend its stay inside the $28,800 to $42,615.20 range for a few more weeks.
What is your sentiment on BTC/USD?
On the other hand, if bulls do not give up much ground from the current level, it will suggest that traders are not closing their positions in a hurry. That will increase the possibility of a break above the range and the start of a new uptrend.
The Bitcoin price weekly analysis shows the bulls have made a strong comeback, but can they sustain the momentum?
Bitcoin price technical analysis: daily chart
The bulls attempted to push Bitcoin’s price above the overhead resistance for the past three days but failed. This may have attracted profit-booking from short-term traders, resulting in the pullback on 1 August.
The moving averages have completed a bullish crossover and the RSI is in the positive territory, indicating advantage to buyers. When the sentiment is positive, traders buy the dips to the 20-day EMA.
If the pair rebounds off the 20-day EMA, the bulls will make one more attempt to clear the resistance at $42,615.20 and start the journey toward the next target zone of $50,000 to $51,500.
This bullish view will invalidate if the price turns down and plummets below the moving averages. The bears will then fancy their chances and try to pull the price to the critical support at $28,799.45.
How to trade bitcoin this week
Bitcoin’s short-term trend has turned positive. If the price rebounds off the 20-day EMA, it will suggest that traders are buying on dips. That will improve the prospects of a breakout of $42,615.20.
If that happens, the pair could start its journey to the overhead resistance zone of $50,000 to $51,500.
Alternatively, if the price dips below the moving averages, the pair could extend its range-bound action for a few more days.
It’s important to remember, however, that your decision to trade depends on your attitude to risk, your expertise in this market, the spread of your investment portfolio and how comfortable you feel about losing money.