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Bitcoin’s up channel indicates retracement of price



Bitcoin's short term price outlook is bearish
Source: Unsplash

On a higher time frame [daily] Bitcoin’s price has formed a bearish pattern and indicated a price retracement to $8,000 and perhaps lower. It is the same on a lower, one-hour time frame. The formation of an up-channel indicated a bearish outlook for the price. The targets range from a 2% decline to 7.51%.

Bitcoin’s one-hour chart

BTCUSD TradingView

As seen above, the up-channel pattern extends from May 25 to the present day. Mid-way through the channel, the price tried breaching higher, however, it failed and returned to the channel. While the price struts slowly below the mid-line and towards the lower line, the chances of price breaking out are increasing.

Since the channel is up-sloping, the breakout will be downward. The possible targets for the coin include $9,322, marking a 2.2% decline from the current level. Following this, is a conservative and plausible target at $9,098 at a 4.57% drop from the current price level. Depending on how bearish the price action is at the point of breakout, the price could dip to the last target at $8,819.

Bitcoin miner first spend

Source: Bytetree

First spend is a metric that measures BTC moving out of miner wallets and gives a perspective about miner capitulation. From the above chart, it is clear that before the halving, the first spend was at around $15 million worth of BTC per day, however, it spiked as halving neared. On day of the halving, it hit $20 million and collapsed to $6.7 million. The spike and the eventual drop represents inefficient miners going out of business and miners that are breaking-even selling their reserves to keep mining.

With negative difficulty adjustments the miners that were breaking-even are now profitable and slightly inefficient miners are coming back again. Additionally, due to the start of the hydro season in China, the electricity costs are around $0.03(3) per kWh and hence, older mining rigs are now profitable.

The price looks bearish and hence, a drop to $8,000 or below on a longer time frame puts these miners in jeopardy.

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Akash is a full-time cryptocurrency writer and an analyst at AMBCrypto. He is an engineering graduate with an avid interest in finance and economics. Attracted to the chaos of trading, Akash has invested in BTC, ETH and XRP for educational purposes.

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