Bitcoin price continues to break through resistance levels while recovering previously lost territory. Unlike other rallies in the region today, this price action may indicate a continuation of the trend and a new dawn for the industry after months of corporate collapse and bankruptcy.
As of this writing, Bitcoin (BTC) is trading at $22,800 with a sideways movement over the last 24 hours. In the previous week, the cryptocurrency recorded a 10% gain. Other cryptocurrencies in the top 10 by market capitalization experienced similar price action with substantial gains during the period.
Is Bitcoin Finally Bottoming?
According to analysts at Jarvis Labs, Bitcoin’s current rally is the result of a prolonged consolidation below the 200-Day Moving Average (MA). This moving average is one of BTC’s most important levels that operate as critical support during bearish cycles.
As Bitcoin recovers the 200-day MA around $19,520, analysts want to see a consolidation above this level. The rally may extend if the cryptocurrency can continue above, pushing BTC to higher levels, reinforcing the “flip from the 200-day MA from resistance to support.”
As seen in the chart below, during the bear market of 2019, BTC saw a long consolidation below its 200-day MA before recovering that level by the end of the year. According to analysts, the longer the consolidation, the better the improvement for BTC’s overall market structure as other moving averages rise.
The above does not mean that Bitcoin will continue to rise, returning to the high of $69,000. However, this shows that the health of the BTC market is improving, with the basis for further gains.
This new status quo makes potential declines an opportunity for optimistic investors. Jarvis Labs analysts wrote:
(…) And while there is still a fairly high probability that the early January price level will be retested at some point in 2023, there is also strong data suggesting that such a retest will present a major buying opportunity.
Hint Accumulation Level In 2019 Like BTC Bottom
In addition to this period of consolidation below the 200-day MA, which marks a 2019-like bottom, BTC has seen “sustained accumulation.” The image below shows that Bitcoin investors have “moderately accumulated” (blue dots in the graph below) more of the cryptocurrency.
As with the 2018-2019 bear market, this period of accumulation preceded a market rally. In the coming months, Bitcoin should see more aggressive accumulation (red dots in the chart below) to support another bullish season.
The US Federal Reserve (Fed) remains the biggest obstacle to Bitcoin’s rally. Financial institutions raise interest rates to reduce inflation while distorting financial markets.
Market participants expect the Fed to raise monetary policy, but gains in stocks and crypto, combined with sticky inflation, could trigger the opposite. If that happens, optimistic investors may see a buying opportunity presented by Jarvis Labs analysts.