Bitcoin (BTC) revisits a critical support and is now resting above the 38.2% Fib extension level which corresponds to a price of $3,955. If the price remains to hold above this level, we could see BTC/USD rise towards $4,200 or higher in the days ahead. This is expected to be the final move to the upside for Bitcoin (BTC) before the next major decline. Daily trading volume is still on the decline and the bulls do not seem interested to take charge just yet. However, a rise from current levels is going to be a quick one and the price is expected to form a few big candle bars to the upside before the weeks closes. It is quite unlikely for Bitcoin (BTC) to drop straight below the current support towards $3,400 without making a move to the upside first.
The rise in bullish momentum that we witnessed before the beginning of this month was lost to sideways movement for most of March. However, the price will now have to make a decisive move either way. The price is trading under overbought conditions on the weekly time frame and undersold conditions on the daily time frame. The most probable way this plays out is that the price will rise short term and then decline heavily long term. The probably of this long term decline is strengthened by a rise of buying interest in long term bonds and a loss of bullish interest in the S&P 500. Bitcoin (BTC) being part of a highly speculative market is expected to be worse off than equities if the situation does not change. We expect buying interest in long term bonds to continue to rise until the S&P 500 sees another decline. This means that Bitcoin (BTC) has not bottomed yet and will have to decline further in the weeks ahead.
The number of margined shorts has declined significantly but it is still not at a point for bears to turn more confident. The daily chart for BTCUSDShorts shows that the number of margined shorts is currently trading below the 38.2% Fib retracement level and could decline further in the days ahead. It is important to note that BTCUSDShorts is oversold on the weekly time frame which means the number of margined shorts is expected to rise over the next few weeks.
The sell pressure on BTC/USD has declined significantly in the past few weeks but the bulls are still not prepared to take control. Conditions have been ripe for a breakout since the beginning of the week but the bulls have yet to take advantage of that. The bears on the other hand seem to be completely baffled by the sideways movement of Bitcoin (BTC) at the moment. A sharp short term spike in the price of BTC/USD is likely to scare off most bears and the number of margined shorts would decline even further. This is when BTC/USD will finally top out short term and begin its next major decline.