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Bitcoin forms massive buyer support: is this enough for a long-term upward trend?

Relevance up to 03:00 2022-04-21 UTC–4

After two bearish weeks, Bitcoin managed to gain a foothold above the $40k mark again. In many ways, this was made possible thanks to the purchasing activity in the areas of key support zones. This speaks to the current strategy of large and long-term investors in relation to Bitcoin. Also, after a while, we can say that several long-term trends have formed in the BTC market, which can positively affect the quotes of the main cryptocurrency.

But first, let’s look at the current situation around Bitcoin. It became obvious that buyers are active only in case of a threat to the upward trend. When breaking through round marks or other support levels, bulls behave with restraint. However, when important levels are reached, buyers make a sharp and powerful price rebound. This suggests that the current investment strategy of the bulls is adjusting to the new realities of monetary policy. In other words, buyers are ready to protect the upward channel within which BTC moves, but will not use liquidity volumes for local purposes.

The influence of the Fed’s policy is also reflected in the upward trend of the cryptocurrency. Despite a fairly confident bounce and the formation of a “bullish engulfing” pattern, the subsequent green candle turned out to be uncertain. This indicates the absence of large volumes after the protection of the structure of the upward trend. In other words, investors are not ready and do not fully believe in the successful launch of a bullish rally at the moment.

Despite all the facts, the cryptocurrency has formed important support zones, and investors are ready to defend the upward trend. Several established trends contributed to this. We have already dealt with the first one: it lies in the fact that the bulls protect the key support zones of the ascending structure. This is a positive long-term signal, demonstrating the confidence of Bitcoin investors that a bullish rally is coming. Here, too, it is crucial to note that the $38.4k support zone has withstood the selling volumes accumulated over the weekend. This is a positive signal, again indicating the strength of the bulls.

The outflow of BTC coins from cryptocurrency exchanges also continues. Crypto exchange balances have fallen to a 4-year low. Santiment also noticed signs of “buy the dip” on April 19th. It is important to understand that more than 60% of the coins are in profit, and even despite this, investors continue to increase stocks. This behavior is a clear sign of preparation for a bullish trend.

This also suggests that investors are confidently coping with partial profit taking by medium-term investors. There is also a longer-term perspective. Thanks to the active accumulation of BTC coins, open interest in the coin is growing, as stocks on exchanges are declining. Under such conditions, artificially created greed will push the price up.

Given the current macroeconomic situation, one cannot be completely sure about the short-term prospects of cryptocurrency. However, even now there is no doubt that the asset will resume its upward movement in the coming months. The next event that will determine the short-term fate of the cryptocurrency will be the launch of the quantitative reduction program in May 2022. Here, Bitcoin can follow the stock markets to $30k, or it can break the correlation by changing the investment strategy for cryptocurrency.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

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