FX.co ★ Bitcoin: Bearish divergence looming

Bitcoin's breakout of the resistance level at the 31,082.82 - 38,610.88 corridor (marked with red dotted lines) on Monday turned out to be false. But as of today, on the daily chart, the growth has not stopped, and a second attempt is possible.

Meanwhile, network analysts note that the metrics are beginning to form a kind of bearish divergence towards the price. It looks like recent growth has had little impact on these networks. They do not yet show any signs of increased activity, or active growth in demand. Hibernation is evidently in the circuit.

Thus, the number of addresses interacting with BTC has been steadily decreasing during the week, having fallen by almost 26% to 632,000. But now there is a recovery, and the number of active addresses has already grown to 770,000.

Thus, the decline in the number of active bitcoin addresses is at odds with the upward trend in price - here's a potential bearish divergence. Experts point out that even though bitcoin looks very optimistic, it needs an increase in activity at the network level to sustain this rally. Santiment reports indicate that this is often considered an indicator of demand.

Moreover, while bitcoin was recovering last week, the number of unique bitcoins moving daily on the network was moving in a downward trend. There were about 71,600 compared to 328,000 coins in May.

The fall in bitcoin turnover suggests that coin holders are inactive, while the total "value" moved is constantly decreasing.

Analysts believe that despite the concerns these indicators provide, it may take some time for the latest rally to reflect online. However, if network activity continues to decline, it will hamper the subsequent recovery of the main cryptocurrency.

It is worth noting that technical analysis does not give us confidence in the further growth of bitcoin. The sideways growth forecast of 31,082.82 - 38,610.88 has been worked out, there is another strong resistance at 41,980.24, where the price can reach. And only in the case of its true breakout and resistance, will it be possible to talk about the growth of bitcoin. In the meantime, this is only recovery, the return of losses in the sideways.

Meanwhile, 41,980.24 remains a strong mirror level. And a strong news driver is necessary for its breakdown. The current growth also took place under the influence of catalysts, but this is more a help of a technical trend than a breakdown of the picture.

What can we expect from bitcoin? Drivers are difficult to predict. But the technical picture can be relied on. Now, in my opinion, it is worth preparing for a downward reversal. And it will happen either from the level of 38,610.88 - the current resistance marked with a red dotted line, or from a strong mirror resistance at 41,980.24.

And yes, it is not yet time to buy bitcoin. Buying will be appropriate only if it consolidates above 41,980.24. Selling looks more likely, the main thing is to understand where the reversal will take place and wait for a good entry point, ideally with a small stop loss. But there is no need to rush.