Bitcoin hit a monthly high for the second time in a week amid January reporting of rising inflation. Subsequently, the cryptocurrency rolled back to the local support zone and continued to accumulate volumes. Following BTC, the altcoin market also fell but judging by on-chain metrics and the general mood, the crypto market is completing the formation of a corrective structure in order to resume the upward movement.
Over the past week, Bitcoin has touched the $45.9k resistance level twice. At the same time, the price feels confident at the local support level of $42.4k. Despite the presence of bullish momentum, BTC/USD quotes are increasingly being squeezed into a narrow area of $42.4k–$45.9k. Any squeeze entails going outside the range, and in order to complete the corrective structure, Bitcoin needs to make a downward exit outside the channel.
We are still talking about the technical analysis figure of the inverted "head and shoulders," since as of February 11, this is the main signal for the upward movement of the cryptocurrency. In addition, a decline to the $40k-$42k area is necessary for Bitcoin to recover, as the main technical metrics are in the overbought zone. The stochastic oscillator continues to move above the green zone, which is a direct consequence of the local overheating of bitcoin.
At the same time, it is important to note that the MACD continues to move in the green zone, and the RSI shows bullish signals around 60, which is the optimal mark for an upward movement. With this in mind, the conclusion suggests itself that BTC will keep the flat direction within the framework of consolidation, which will enable altcoins to catch up to key positions, before the price rise and Bitcoin dominance.
Considering the scenario in which the asset moves flat, I want to highlight three main reasons for the approach of a powerful bullish momentum. The first reason is fundamental, and lies in the active actions of big capital. Over the past month and a half, institutional investors have accumulated $10 billion worth of BTC. Taking into account the price buy-off that has started, the consolidation stage is coming to an end.
At the same time, the market is still scared, despite the neutrality of the index of fear and greed. This is expressed in the ratio of long and short positions, where the bears significantly dominate. Considering the behavior of the market with a large bias in one of the sides, a strong upward momentum awaits us, which will collect liquidity from the shortists in the $46k–$44k range.
And the third reason for the approaching bullish momentum is the historical performance of the fear and greed index. Analyzing the movement of the metric in the summer of 2021, one can detect the achievement of the mark of extreme fear. We observed a similar picture in December-January. Now the metric has recovered to the level of 50, and according to the dynamics of the price movement of the index in the summer of 2021, we are waiting for a movement towards the greed area, and, accordingly, an increase in the price.
