Bitcoin has experienced significant upward momentum over the past month, surpassing previous consolidation ranges and reaching new yearly highs. Glassnode data indicates that Bitcoin is currently in the third wave of investor accumulation, a pattern observed in previous market cycles.
The three waves of accumulation include:
First Wave: Shortly after the All-Time High, when the price rapidly moves away from that high level.
Second Wave: During the depths of the Bear Market, as the price floor for the cycle is discovered and tested.
Third Wave: After the cycle bottom, when prices start increasing in anticipation of the Bitcoin halving.
Historically, a substantial correction has followed the third wave of accumulation in the last market cycle, leading to a downtrend until the March of the halving year.
Bitcoin has currently reached a High-Volume Node on the Volume Profile, indicating a potential area of heavy supply or selling pressure. Analysts suggest the possibility of a short-term reversal to revisit previous price levels.
Key considerations:
Establishing Support: Observing if Bitcoin establishes previous resistance as support, potentially leading to a range-bound movement before a breakout.
Failure to Establish Support: If Bitcoin fails to establish previous resistance as support, it may decisively break down into a previous trading range.
A price gap has emerged in Bitcoin’s recent movement, and traders are advised to consider potential short-term reversals. Conservative traders may opt to take profits on long positions, awaiting confirmation of flipped resistance before re-entering. For those anticipating a breakout, short-selling positions into the end of the year and potentially into Q1 ’24 is recommended.
Aggressive traders can also consider profit-taking on long positions and initiating short positions early, either for the re-test of the Fair-Value Gap or to time Bitcoin’s correction swing.
Please note that cryptocurrency markets are highly volatile, and trading decisions should be made based on thorough analysis and risk management.