This week, Bitcoin is trading within a narrow consolidation range after an unsuccessful attempt to reach above $48,000. However, with the opening of the US session, the price of the asset began to decline to the area of $45,500. This suggests that the bull market has taken a pause. Despite this, the market does not show any bearish trends.
Bitcoin declined and pierced the uptrend line near $44,200, but later recovered steeply to $46,000. This is an important signal, indicating buying potential of the BTC/USD pair. It also signals a local crisis in buying volumes. After the decline to $44,260, traders started pushing the price to bears' stop-loss orders. In other words, the market is looking for support for the uptrend. Meanwhile, the asset has been trading within the narrow sideways channel for the second week.
However, there is every reason to believe that the decline and consolidation are temporary, and the asset will continue to grow soon. MicroStrategy is leading the entire market by volumes and is buying another 4,167 BTC for about $190.5 million, at an average price of about $45,714 per Bitcoin. April is historically a very profitable month for the cryptocurrency, and therefore it is likely that the current consolidation will be followed by a sharp breakthrough of $48,000 and movement towards $50,000-$51,000. This is mainly suggested by the increased activity of major BTC holders.
However, there is a flipside, because for at least three years investors have been using the rule of active accumulation in April and locking in most of the profits in mid-May. A sell-off in May is likely to trigger increased volatility and a deeper correction. On the other hand, we see a fundamental decline in BTC volatility due to institutional traders that use the coin.
According to the CEO of Pantera Capital, this suggests smoother and smaller price declines. Indeed, if we look at the current bear market, we see that the price of the asset has fallen only by 52% from its peak of $69,000. Such a price decline is more typical of a deep correction, but not a bear market. However, given the rising level of cryptocurrency adoption, the volatility of the asset is declining, followed by a correction.
Therefore, BTC may become a profitable asset in the long term. Short-term investors will also profit from the sell-off in May. However, the asset is unlikely to fall below $42,000-$46,000. Bitcoin has tested support at $44,200 twice in the past six days. As the unspoken rule says: the more often the price tests the level, the more likely it will break through it.
With this in mind, further Bitcoin declines to $42,000-$44,000 are likely. Technical indicators are signaling the same: the stochastic has formed a bearish crossover and a steep peak, indicating a lot of pressure from sellers. The RSI also continues to decline, confirming the stochastics' trend. Investors have a chance to catch the price below $44,000, but most likely, bulls will instantly recoup this decline due to strong confidence in BTC's further growth.
