Bitcoin Bulls Defend $23K Amid Warning Bear Market Rally ‘Alive’

Bitcoin (BTC) tested $23,000 as support at the August 1 Wall Street open with key moving averages in focus.

BTC/USD 1 hour candlestick chart (Bitstamp). Source: TradingView

The 200-week moving average gets a lot of attention

Data from Cointelegraph Markets Pro and TradingView followed BTC/USD as bulls and bears battled for control amid a narrow trading range.

Bitcoin was buoyed by its highest weekly close since mid-June the other day, with its monthly candle also making its biggest gains since before last year’s all-time high of $69,000.

However, what mattered among analysts and traders was the market’s ability to stay higher for a few more candles.

Despite the recovery of important trend lines such as the 200-week moving average (MA) and realized price, Bitcoin will not be out of the woods until it starts producing full weekly candles without retests of these levels.

“Bear Market Rally Still Alive and Well”, Material Indicators Chain Analysis Resource explain in the day.

“To call it another way, confirmations of valid breakouts above key MAs are needed. The 200 week and 50 month are the first to consider for BTC, but only if we have full candles above the line. Fuse under makes invalid.’

BTC/USD 1 month candlestick chart (Bitstamp) with 50 month MA. Source: TradingView

As such, $22,880 and $21,965 were major holding lines for bulls and increasingly close to the spot price.

Fellow trader and analyst Rekt Capital however predicts that Bitcoin will naturally try to retest the 200-week MA as support in the near term.

Commenting on price strength, however, he noted that the MA’s 200-week retracement is the first such event following an “extended downtrend” since the March 2020 COVID-19 crash.

“Bitcoin may struggle to break above the $24,000 level, but its weekly candle finally closed above the 200-week moving average and could significantly improve technical sentiment,” Zain Haider, co-founder of Blockchain Q&A platform Answerly, summarized in the additional comment.

Activities in the chain are “weak at best”

As US stock markets were flat on the day, Bitcoin and altcoins had little macro pressure impacting price action.

Related: Best Monthly Profits of October 2021 – 5 Things You Need to Know About Bitcoin This Week

However, the situation remains somewhat uncertain, researchers at blockchain analytics firm Glassnode warned, thanks to markets still reflecting bearish sentiment after months of downtrending.

“Both Bitcoin and Ethereum saw a price recovery this week, coming off extremely oversold conditions and fueled by risk-on sentiment following the July FOMC meeting,” they concluded in the latest edition of Glassnode’s weekly newsletter, The Week on Chain.

“However, below the surface, demand for on-chain transactions remains weak at best, and this rally has yet to see a convincing continuation in the demand activity seen.”

Glassnode added that on-chain data still represents “only part of the picture” and that attention must now be paid to whether the emerging signs of change can last.

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