Bitcoin sees a constriction on the price charts, what could the outcome be

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Dis­claimer: The infor­ma­tion pre­sent­ed does not con­sti­tute finan­cial, invest­ment, trad­ing, or oth­er types of advice and is sole­ly the writer’s opinion.

  • Tech­ni­cal indi­ca­tor showed volatil­i­ty at a near 2‑year low
  • Will the $19k sup­port be crushed in the com­ing weeks to send BTC bulls reeling?

USDT Dom­i­nance, a mea­sure of the cryp­to mar­ket cap held in Teth­er, has been on the rise since mid-August. This was a sig­nal that mar­ket par­tic­i­pants pre­ferred to hold the sta­ble­coin rather than a cryp­to asset. Bit­coin has held on to the $19k sup­port in recent weeks, but it too steadi­ly approached the lows of a four-month range.


Here’s AMBCrypto’s Price Pre­dic­tion for Bit­coin [BTC] for 2022–2023


Indi­rect­ly, it was also a sig­nal of the bear­ish sen­ti­ment across the mar­ket. News of infla­tion and ris­ing inter­est rates chokes mon­ey sup­ply to risk-on assets such as Bit­coin, and recov­ery could be months or even years away.

Bollinger bands signal a massive squeeze in progress

Bitcoin sees contraction, watch out for huge volatility

Source: Trad­ingView

Since June, BTC has trad­ed with­in a range from $24.4k to $18.6k. The lows of this long-term range have been test­ed mul­ti­ple times since Sep­tem­ber. Each retest yield­ed a weak­er response than the pre­ced­ing one.

This would like­ly see buy­ers exhaust­ed in the upcom­ing retests, and BTC could crash right through the sup­port lev­els at $17.8k and $17k. How much fur­ther south can it go? It was a scary thought for the bulls, but $16.2k could become a fea­si­ble target.

The Rel­a­tive Strength Index (RSI) has faced resis­tance at neu­tral 50 and was sim­ply unable to climb above it in recent weeks. The On-Bal­ance Vol­ume (OBV) was also in decline since mid-Sep­tem­ber and showed sell­ing pres­sure has been the more dom­i­nant force.

The Bollinger Bands width indi­ca­tor reached a low of 0.07 on the dai­ly chart, a val­ue it pre­vi­ous­ly reached in Octo­ber 2020. While that was fol­lowed by a slow, mas­sive ral­ly, the cur­rent con­trac­tion of Bit­coin could have a dif­fer­ent flavor.

Exchange supply reached new lows

Bitcoin sees contraction, watch out for huge volatility

Source: San­ti­ment

The Sup­ply on Exchanges met­ric has been falling all year. This showed coins were moved out of exchanges and onto pri­vate, like­ly cold wal­lets. This was like­ly a sign of accu­mu­la­tion. The last time the exchange % had been this low was back in Novem­ber 2018.

The dor­mant cir­cu­la­tion saw a large spike a few days ago. The same chart showed this to be a BTC move off the exchanges. Since July, the dor­mant cir­cu­la­tion has been rather min­i­mal for the most part and did not wit­ness huge surges.

Hash rate on the rise, but profitability isn’t

Bitcoin sees contraction, watch out for huge volatility

Source: Blockchain.com

Through­out all these months, the Bit­coin hash rate has gone high­er. This was a pos­i­tive out­come, as the net­work was more secure against 51% attacks. At the same time, the BTC min­er prof­itabil­i­ty also declined. It stood near the lows from Octo­ber 2020 at USD 0.066/day per 1THash/s.

Will min­ers even­tu­al­ly cave in and be forced to sell their BTC? Or has the accu­mu­la­tion in recent years much reduced the risk of anoth­er min­er capit­u­la­tion event? Only time would tell, but one way or anoth­er, some­thing has to give.



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