Bitcoin stalls but analyst says on-chain metrics suggest bulls are still in it

Bitcoin has found it difficult to break higher over the past two days, with bulls hemmed within the $42-$44k. The pioneer cryptocurrency, which last week came close to retesting support levels seen in late January, raced to highs near $45,000 earlier this week as it briefly decoupled from stocks.

The upside came amid fresh buy-side momentum, which fundamentally, got the fuel from the spotlight shone on crypto amid donations to Ukraine and sanctions to Russia.

But after shining in the spotlight with a massive bounce that started over the weekend, BTC price has fluctuated with the above range. Currently, its price against the US dollar is nearly 3% down in 24 hours. Over the week, Bitcoin has added 13%.

Bitcoin price outlook

Crypto analyst Scott Melker says Bitcoin’s retest of $42k is critical. Flipping the major downtrend line into support would be even better.

IntoTheBlock data shared by crypto analyst Ali Martinez shows the two main price levels for BTC short term. The $45k area represents the key resistance zone while $40k offers the main anchor to the downside. If bears breach the $40k level, BTC could go to $37k or lower.

What’s next for Bitcoin? Accumulation phase?

According to an analyst note from UK-based crypto platform GlobalBlock, BTC is likely to remain ranged. But he’s optimistic of a bullish flip stating that the stalling could be an indicator of a new phase of the investment cycle.

In a note emailed to Invezz on Thursday, GlobalBlock’s Marcus Sotiriou says that on-chain metrics indicate Bitcoin’s accumulation phase may be underway.

An accumulation phase historically precedes significant price gains in what we call a bull market. It’s the opposite of distribution phases. Here, a previously bullish sentiment flips into one with uncertainty even as prices continually slow within a tight range.

However, looking at on-chain data which Sotiriou notes, we see that more and more investors are becoming hodlers. These are long-term holders who believe the price will go higher amid fundamental growth. This, the firm’s analyst noted, is a factor that impacts digital asset prices with most investors holding on for higher prices.

“Crypto adoption globally continues to soar and aligns with the thesis that we are in an accumulation phase,” Sotiriou wrote in the email.  

Among key pointers of increasing adoption is eBay’s announcement that the company is set to integrate crypto payments. Others include the filing for a crypto exchange-traded fund by financial services firm Charles Schwab. With 33.3 million accounts, the company’s move to seek approval for a Crypto Economy ETF could be big for the digital asset space.

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