Key Insights
Bitcoin surged to $113,900 after dipping to weekly lows, driven by bullish signals. Large investors have offloaded 147,000 BTC since August, indicating supply constraints. Additionally, Bitcoin options showed low implied volatility, suggesting a potential significant movement ahead.
Bitcoin’s Recovery from Recent Lows
On Wednesday, Bitcoin (BTC) made a rapid ascent to $113,900 after dropping below Monday’s low of $111,500 and momentarily reaching $111,000 on Binance during the Asian trading hours. This rebound marks an initial effort for a mid-week recovery, bolstered by emerging bullish indicators on the price charts.
Indicators of Bullish Momentum
A major factor contributing to this recovery is the bullish divergence observed between the relative strength index (RSI) and Bitcoin’s price on both the one-hour and four-hour charts. This phenomenon occurs when the price experiences lower lows while the RSI records higher lows, often signaling a decrease in bearish momentum and the possibility of a price reversal.
Technical Analysis Points to Potential Growth
The recovery also aligned with Bitcoin revisiting its daily order block, establishing a technical foundation for a potential rally toward $115,000. However, further confirmation is essential; a four-hour close above $113,400 would indicate a decisive transition from bearish to bullish conditions. Moreover, reclaiming the 200-period exponential moving average (EMA) on the four-hour chart would further support bullish momentum.
Mixed Reactions from Traders
Responses from crypto traders regarding this movement were varied. Michaël van de Poppe, founder of MN Capital, acknowledged the strength of the rebound, saying, “Good sweep of the lows for Bitcoin and it holds up. Breaking the 4H 20 EMA would be great for upwards momentum. Strong bounce.” Conversely, trader Crypto Chase warned that Bitcoin needs to securely reclaim the $113,400 to $114,000 range; otherwise, its recent gains might dissipate, potentially leading BTC back toward $107,000.
Whale Activity and Market Volatility
While Bitcoin’s short-term recovery appears to be gaining momentum, broader on-chain trends reveal conflicting signals. Earlier reports indicated that whale entities, those holding 1,000 BTC or more, have sold approximately 147,000 BTC, valued at $16.5 billion, since the cryptocurrency reached its all-time high above $124,500 in August. This 2.7% reduction in their holdings indicates ongoing selling pressure from major investors, which is often seen as a challenge for price recovery.
Market Conditions Suggest a Potential Shift
Despite these selling trends, other market indicators suggest an unusually calm environment rather than an outright bearish one. XWIN Research highlighted that Bitcoin’s implied volatility has reached its lowest levels since October 2023, a period that preceded a significant 325% surge from $29,000 to $124,000 for BTC. The current market conditions may represent a “calm before the storm,” where low volatility and subdued trader positioning could be building momentum for a major price movement.
Constraining Supply Amid Whale Distribution
Supporting this perspective, data from CryptoQuant indicated that exchange reserves remain at multi-year lows, leading to fewer coins being available for sale. Meanwhile, Bitcoin’s Market Value to Realized Value (MVRV) ratio is hovering near neutral territory, suggesting minimal pressure for either panic-selling or aggressive profit-taking. Collectively, these factors illustrate a market caught between whale-driven sell-offs and a tightening supply backdrop.
Disclaimer
This article does not offer investment advice or recommendations. All investment and trading activities involve risks, and readers are encouraged to perform their own research before making any decisions.
