Bitcoin has recently declined below important support levels after reaching a new peak at the beginning of the month. Current market indicators suggest prevailing selling pressure, increasing the likelihood of further descent.
Bitcoin's Technical Indicators Signal a Downward Trend
On the daily chart, Bitcoin's price has fallen outside the long-followed descending channel, slipping below both the $110,000 support and the 100-day moving average. The loss of these levels has led investors to consider a potential deeper pullback. Analyses indicate that the next support is highlighted as the fair value gap around $104,000 and the 200-day average near $100,000. The Relative Strength Index (RSI) remaining below 50 suggests sustained selling pressure, indicating that the momentum is controlled by bear sentiment. Thus, the most likely scenario is the continuation of the downward price movement.
Bitcoin Price Analysis
A similar weakness appears in the four-hour chart. The price is testing the lower levels of a narrow descending channel in the short term. Previous supports at $117,000 and $110,000 were broken and retested, strengthening the possibility of the leading cryptocurrency gravitating toward the fair value gap around $104,000. According to Fibonacci retracement levels, this region also stands out as a significant threshold for a potential reaction.
Significant Decline in Bitcoin Reserves on Exchanges
On-chain data illustrates a different picture. Since the start of 2024, the Bitcoin reserve on exchanges has steadily decreased. As reserves, represented as a purple line in the charts, consistently decline while the price, depicted in white, reached new highs, investors have responded by withdrawing their BTC from exchanges to cold wallets, causing the price to react accordingly. This contraction in supply supports the market's long-term outlook, as the amount of BTC available for sale diminishes. When demand remains stable or increases, it sets the stage for the price to move upward again. However, short-term corrections are inevitable, particularly during periods when demand weakens or macro conditions shift.
The current state of the Bitcoin market showcases complex dynamics between supply and demand, leading to price volatility. Investors should closely monitor key support levels and overarching trends that may influence price.
