The Bitcoin price has shown a strong reaction after the lawsuits filed by the US Securities and Exchange Commission (SEC) against Binance and Coinbase, which may have surprised many. Generally, rising prices on negative news are a strong indication that the sell side is losing steam and a bottom is near.
In the case of the Bitcoin price, however, there are still some anxieties hovering over the market at the moment that could mean another, possibly final, drop to the downside. For example, it is still not clear whether the U.S. Department of Justice (DOJ) will also take legal action against Binance and what impact this will have on Binance’s international business.
Bullish Arguments Are Growing For Bitcoin
Nevertheless, the bullish signals are mounting. As Glassnode co-founders Jan Happel and Yann Allemann write in their latest analysis, Bitcoin’s Bollinger bands pretty much reflect the current state. On the 1-day chart, BTC price remains within the accumulation zone, between the lower band and the 20-day moving average.
“Which suggests that this is still a good entry point,” the co-founders of the leading on-chain analysis service say. At the same time, with reference to the chart below, the analysts warn that traders should be aware of widening bands that could herald impending higher volatility that could lead to abrupt moves.
Looking at Bitcoin’s open interest, Allemann and Happel state that despite the strong reaction to the bad news, there is no clear direction for now:
We believe that the price will continue to consolidate alongside open interest until we approach the FOMC and the market begins to position for the expected output.
Remarkably, next week’s Fed meeting – on June 13-14 – will be the first in years without a clear consensus on the rate decision. Since the Fed started raising rates, there has been a clear consensus at every meeting.
According to the CME FedWatch tool, futures show a 30% chance that rates will be raised and a 70% chance that they will not. The lack of clarity is also likely to lead to more volatility in the BTC price ahead of the decision.
BTC recently retested the 200-week moving average (MA) at $25,306, but supply liquidity was somewhat thin here. In addition, if price goes down again, a retest of the 50-month MA at $25,898 would be very interesting, where liquidity and sentiment seem to be stronger.
It is worth noting that BTC has already formed a double bottom at the 50-month MA. A triple bottom would be bullish. On the other hand, a loss of the 200-month MA would open the way to bearadise.
In this respect, a few very important days await BTC in the coming week(s). A defense of the aforementioned price levels is of utmost importance. If defended, a journey to bull paradise could be next, but bulls need to turn the tables on the lower time frames.
Featured image from iStock, chart from TradingView.com