Bitcoin price analysis (5-11 July): range-bound action to continue?

Bitcoin’s failure to rise above the 50-day SMA indicates bears are active at higher levels.

Bitcoin had a roller-coaster ride in the first half of 2021. The bulls propelled the price to above $64,000 in April. Gravity caught up with the largest cryptocurrency and it plunged to about $29,000 in June. The sharp fall in price, along with increased regulation by China and the UK, worsened sentiment.

The recent crackdown on bitcoin miners in China resulted in more than a 54% drop in the network’s hashing power, necessitating an automatic downward adjustment. Bitcoin’s mining difficulty dropped by about 28% on 3 July, the largest on record, according to Coindesk. This means it’s become comparatively easier to mine Bitcoin for the miners who are still on the network.

However, investor’s sentiment remains bearish. In a recent CNBC survey of portfolio managers and equity strategists, 44% of respondents said Bitcoin “will be below $30,000 and about flat for the year”. Only 6% of participants think Bitcoin could rally to $60,000 this year. Of the remaining 50%, 25% expect the price to rise to $45,000 and the rest believe Bitcoin will recover to $55,000.

Bearish sentiment and a negative outlook for bitcoin has not deterred institutional investors from entering the crypto space. According to a report on financial news website TheStreet, Soros Fund Management’s chief investment officer, Dawn Fitzpatrick, has approved active trading in Bitcoin and possibly other cryptocurrencies in the last few weeks.

Does the entry by large institutional investors indicate that bitcoin could be close to a bottom? Read our bitcoin price trend analysis to find out.

Bitcoin price technical analysis: Weekly chart

Bitcoin’s price remains sandwiched between the 50-week simple moving average (SMA) and the 20-week exponential moving average (EMA). The BTC/USD pair rose 1.68% last week to $35,281.70.

The down-sloping 20-week EMA and the relative strength index in the negative zone indicate that bears are in control. If the bulls fail to push the price to the 20-week EMA, the possibility of a retest of critical support at $28,639.70 increases,

This is an important support to watch out for because if it cracks, selling could intensify, possibly causing the pair to drop to the next critical level at $20,000.

But if the price rebounds off the 50-week SMA, bulls will attempt to drive it above the 20-week EMA and the overhead resistance at $41,327.35. A breakout at this level will indicate that the correction could be over.

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The bitcoin price weekly analysis shows the bears have not given up and are selling on rallies. Will this result in a further downside this week? Let’s perform a BTC price analysis on the daily chart to find out.

Bitcoin price technical analysis: Daily chart

The bulls pushed bitcoin’s price above the 20-day EMA on 4 July but they couldn’t clear the hurdle at the 50-day SMA. This suggests that bears have not given up yet and are attempting to stall the relief rally at the moving averages.

The bears have pulled the price back below the 20-day EMA today and will try to sink the pair below the immediate support at $32,703.60. This could result in a drop to $28,639.70. A strong rebound off this support will suggest accumulation at lower levels

A breakout and close above the 50-day SMA will indicate that demand exceeds supply. That will open the gates for a rally to $41,327.35 and later to $42,553.25. The bears are likely to defend this resistance zone aggressively.

The flattish 20-day EMA and the RSI just below the midpoint suggest the range-bound action may continue for a few more days.

How to trade bitcoin this week

The price action inside the range is generally random and volatile. Therefore, the best place to buy in a range-bound market could be near the support and sell near the resistance. Traders should be careful and avoid bottom-fishing if support of the range cracks.

Trade bitcoin to US dollar – BTC/USD chart

Bitcoin to US Dollar
Daily change
Low: 16910.5
High: 17092.5

FURTHER READING: Bitcoin explained simply: everything you need to know

FURTHER READING: Bitcoin vs Bitcoin Cash vs Bitcoin SV: the ultimate guide

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