Bitcoin Price Consolidates Above the Key Support Level

FXOpen -

On 16 May, we analysed the long-term BTC/USD chart and created a "roadmap" for Bitcoin's price. This roadmap featured an expanding fan pattern, with the median line and support levels below it, and resistance levels above it.

Analysing the BTC/USD chart on 4 July, we noted:

  • A bearish break below the 1 May low was a potential threat.
  • The price could find support at the psychological level of $55k and the Support 3 line, which is part of the previously constructed roadmap.

How Has the Market Situation Changed Since Last Week?

As the current BTC/USD chart shows:

  • Bitcoin's price fell below the 1 May low.
  • It found support at the Support 3 line, reinforced by the psychological level of $55k.
  • The grey line is acting as local resistance.
  • The convergence of these lines is compressing Bitcoin's price into a consolidation zone.

Bearish sentiment was intensified by the increase in Bitcoin supply from wallets associated with the collapsed exchange Mt. Gox and German government organisations.

What’s Next?

An analysis of fund flows related to Bitcoin ETFs indicates that on Monday (yesterday), there was an inflow of around $300 million, marking the highest buying activity since early June.

For example, market leader BlackRock IBIT led in buying activity with a net inflow of nearly $180 million in one day. Could it be that investors are using the drop to $55k to "buy the dip"?

It's possible that investor inflows could result in a bullish breakout from the consolidation zone.

In a negative scenario, a break below Support 3 would pave the way for BTC/USD to test the psychological level of $50k.