Weekly Technical Overview: Bitcoin Inches Towards Critical Level At $53,000 - Is Covid-19’s Omicron The Cause?

2021/11/29 12:12:13

The world’s largest cryptocurrency, Bitcoin, is experiencing quite some pressure after a few green months. The sudden drop was most likely caused by fear of the new Covid-19 Omicron variant, which pushed traditional markets down as well. Speculators might want to call it a retracement, but the lower time frames have presented themselves in an evident downtrend. To be precise, the timeframes below the 1-hour are setting lower low sequences, with momentum picking up every step of the way.

For the second week straight, Bitcoin has closed with negative gains. With a little more than 10 percent downfall the first week, the second following week takes an extended loss of about 7 percent. A drawdown of more than 15% in a couple of weeks is indeed a significant push caused by the sellers. Furthermore, as we approach the end of November, the monthly close is also in the red, as prices have seen a dip of greater than 10% throughout this week.

That being said, the market's overall trend remains unchanged with the ball in the buyers’ court. As mentioned earlier, investors are seeing the current downtrend as a retracement, which is true to an extent considering the higher timeframe trajectory.

Bitcoin Asset Under Management Takes a Dip

According to a CryptoCompare analysis, the Bitcoin Asset Under Management (AUM) plummeted 9.5 percent to $48.7 billion this month, representing the year's steepest month-over-month drop since July. On the other hand, Altcoin-based crypto funds saw their AUM climb 5.4 percent to $16.6 billion.

Bitcoin monthly assets under management | Source: CryptoCompare

While Bitcoin's status as a potential hedge against fiat inflation continues to entice investors, fresh data shows a shift in opinion as Ethereum and other altcoins gain traction in the face of declining Bitcoin AUM.

Bitcoin Hashrate Falls Amid Price Drop

The hashrate of Bitcoin has been erratic in recent months, reflecting the same trends as the price of the cryptocurrency. Bitcoin's hashrate approached 180 exahash (EH/s) three days ago, just to drop to 128 EH/s a couple of days following it. The latest changes occurred ahead of the forthcoming network difficulty adjustment, which took effect on Sunday. After nine straight climbs, the difficulty will drop rather than the increase for the very first period since mid-July.

The network's computational power slowed around the end of November due to the dip in the currency's value. Bitcoin.com News revealed seven days ago that Bitcoin's hashrate had been continuously increasing over the previous three months. The hashrate of Bitcoin is now sitting at 168 EH/s, down from a high of 178 EH/s last week.

Bitcoin Addresses Grows, Hits 40M Mark

According to blockchain statistics, there are currently 40 million addresses that own one or more satoshi, a new milestone as Bitcoin grows to be among the most widely dispersed assets.

There are 20.2 million addresses that contain up to 0.001 Bitcoin ($50). This is more than twice as many as in 2019 and 6 million more than at the beginning of 2018. Almost 10 million addresses now have a maximum balance of 0.01 Bitcoin. This is a 30% rise from 2020. To draw a quick conclusion, the figures have been doubling since 2018.

However, there isn't much of a difference beyond that, with 6 million addresses holding up to $5,000 in BTC. This is a 1.5 million increase over last year.

Bitcoin Price Action

The price action of Bitcoin has been in favor of the bulls ever since the market set an ATH at the beginning of November.

Although a new high was formed for Bitcoin, the bulls' momentum remains skeptical to many as this high is only about 7% higher than the previous high. On the technical analysis front, the previous ATH barrier, or Resistance, remains unbroken. And the buyers’ failure to breach it puts them in a weak spotlight.

Having that said, if we consider only the recent trend of the market, say on the Daily timeframe, the uptrend remains intact. And this is all that matters to investors. Since the recent market trends majorly determine the upcoming trend of the market, the mainstream has their focus only on the rally that came from lows of just above $30,0000 and all the way up to $67,5000, which is essentially a new ATH for BTC.

Taking the same trend forward, the most recent Support &amp;amp; Resistance level stands at $53,000, as shown in the price chart. On the impulsive move side of things, the move was indeed strong enough, as the buyers broke through the $53,000 Support level (formerly) as well as the higher timeframe’s Resistance level.

With the completion of the push phase, the retracement began from the highs of $60,000. As the market showed signs of forming a high low at $58,000 by taking Support, the prices were taken down by the bears last week.

Bitcoin Price Chart on the Daily Timeframe on KuCoin | Source: BTC/USDT

Currently, the market is slowing, inching back to the S&R, which is a crucial level for the Daily Timeframe Bulls. Bitcoin’s price has recovered to just above $57,000 as big pharma stated they have the means to handle the Omicron variant of the virus. If the market does consolidate at these price levels, and the volume shows up with bullish price momentum, it is highly probable for the market to recover back to its recent highs in the coming weeks.

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