The price of bitcoin has been rising generally as of late, maintaining its overall bullish trend from the start of the year.
An analysis of its charts shows that the market is at crucial resistance levels at the moment, and how it responds to these levels will determine whether BTC continues to be bullish over the coming months, or not.
From a daily perspective, BTC is bearish after a pullback over the weekend.
CoinMarketCap data shows that BTC started the trading day at a price of $29,341. The cryptocurrency rallied to an intra-day high of $30,555, before normalizing to $29,410 where it now sits.
On the daily chart, we can see that the price of BTC finally broke out of the $29,000 resistance sometime around last week, and began advancing towards the $30,000 zone with bullish gusto.
The $30,000 was a significantly strong resistance zone from a technical and psychological standpoint and was broken fairly easily.
However, the bears took control around the $31,000 zone and began to drive the price of the cryptocurrency down from this zone, as evidenced by Friday's spinning-top candlestick.
Friday's formation was immediately followed by a price rejection from the $31,000 zone. Keep in mind that BTC was just bordering on overbought conditions (70.8) at the time.
Monday's candle already seems long and red, indicating growing strength on the part of the bears.
However, the $28,955 zone (red line / 20-day moving average) can be trusted to hold the price of the cryptocurrency up. And even in the case of a deeper correction, Bitcoin may only go as far as the $26,200 zone (purple line / the 50-day moving average).
From the looks of things, Bitcoin's RSI is in a decline from the overbought conditions and is now heading towards neutral conditions.
There is also an impending bearish crossover between the signal line and the RSI-based MACD line, indicating that the current correction may continue, before further movement to the upside.
Judging by this, BTC is inclined to correct itself between zones from $28,955 to $26,200 in a 2 -7% decline.
Bitcoin's reversal from $31,000 is underway. However, the cryptocurrency still has a chance to rise from whatever slump it enters.
Taking a decline to $26,200 as the worst scenario, BTC would have had sufficient bullish momentum to rise again for a retest of the $31,000 zone.
A breakout from this position can then make a 30.34% rise to the next significant resistance zone possible.
A rise of this magnitude leaves Bitcoin around the $34,700 zone.
A helpful on-chain indicator that assesses the ratio of realized gains by holders who purchased their coins during the last six months is the short-term holders' Spent Output Profit Ratio (SOPR). Investors are said to be selling their coins at a loss when the value is less than one.
The price of bitcoin has been steadily increasing, and many investors who purchased at rates below $30K are now in profit. The SOPR indicates that these investors should now be collecting some of their profits at least, from Bitcoin's bullishness over the last few months.
It is clear that short-term investors who purchased their Bitcoin in recent months have aggressively earned gains at a pace comparable to the $69K all-time high range. While realizing profits is a typical bull market activity, if there is insufficient demand to match supply, it might trigger a negative reversal and perhaps a continuation of the bear market into lower prices.
In order to evaluate if the market is starting a fresh bull run or whether it is simply another bull trap, this statistic should be regularly observed.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.