Why is Bitcoin price stuck?

2024-08-23 07:17:32 Primitive Reading

Bitcoin price has fluctuated between $57,814 and $61,815 for nearly seven days, as the 50-day simple moving average (SMA) at $61,662 remains stubborn resistance.

Data from Cointelegraph Markets Pro and TradingView shows Bitcoin price trading at $59,468, down 0.36% amid lower trading volumes, suggesting an extended consolidation period.

BTC/USD daily chart. Source: TradingView

Let’s look at the reasons why BTC price remains stuck today.

Weakness in spot demand for Bitcoin

Bitcoin’s whipsaw price action over the last week can be partly attributed to “weakness in spot demand,” as revealed by data from Glassnode.

Analyzing the cumulative volume delta (CVD), Glassnode estimated the current net balance between buying and selling in the Bitcoin spot market to investigate whether there is any directional bias.

The market intelligence firm noted that “there has been a consistent regime of net sell-side pressure” since Bitcoin hit a new all-time high on March 14, evidenced by a negative adjusted spot CVD (30d SMA), as shown in the chart below.

“The recent failure to break above the $70k zone can be partially explained by weakness in spot demand (negative adj-CVD).”

Bitcoin spot CVD vs. BTC price. Source: Glassnode

Negative CVD values suggest a net buy-side pressure, suggesting that the market is experiencing a sell-side bias.

“Activity in spot markets shows that there has been a net bias toward sell-side pressure of late, and this has not yet completely subsided.”

According to Glassnode, demand in the spot market would recover once the adjusted CVD metric crosses the zero line into the positive region.

If this happens, Bitcoin could potentially move out of consolidation to clearthe $70,000 to $72,000 supplier congestion zone and enter price discovery.

Bitcoin price is pinned under the 50-day SMA

On Aug. 5, Bitcoin price fell below the critical support provided by the 50-day simple moving average (EMA), fueled by the unwinding of the Japanese yen carry trade and fears of a global recession.

Disclaimer: This specification is preliminary and is subject to change at any time without notice. Amazon Finance assumes no responsibility for any errors contained herein.