Recently, Bitcoin (BTC) has experienced a minor price drop; however, a recent analysis suggests there may still be indications of a potential short-term uptrend.
Analyst Yonsei Dent from CryptoQuant provided his perspective on the CryptoQuant QuickTake platform, emphasizing the significance of the Coinbase Premium Index in relation to Bitcoin’s price fluctuations.
Key Indicators for Bitcoin Short-Term Momentum
Dent’s analysis delves into how the Coinbase Premium Index—a metric that reflects the price disparity of Bitcoin on Coinbase compared to other exchanges—might reveal future price trends for Bitcoin.
Dent pointed out the importance of utilizing the daily (24-hour) and weekly (168-hour) moving averages to evaluate short-term momentum. Particularly, when the daily moving average surpasses the weekly moving average, it has historically signaled positive movement for Bitcoin’s price.
He referenced previous scenarios where this technical formation, typically known as a “golden cross,” hinted at a short-term rise in Bitcoin’s valuation.
For reference, a golden cross in technical analysis occurs when a short-term moving average (usually the 50-day) crosses above a long-term moving average (commonly the 200-day).
This pattern is regarded as bullish, suggesting potential upward movement in an asset’s price. It indicates that buying interest is on the rise, and market sentiment is leaning toward positivity.
Currently, the daily moving average has momentarily exceeded the weekly moving average, prompting Dent to propose that this might serve as a crucial support level for Bitcoin, particularly around the $66.4,000 level.
Higher Lows and Positive Momentum Could Indicate Uptrend
Up until now, BTC has been slowly declining after attempting to regain the $70,000 mark on Monday. This implies that the asset might have encountered significant resistance in that price area. As of now, BTC has decreased by 2.2% in the last day, with a trading price of $65,832.
Notwithstanding this recent price activity, Dent’s analysis indicates that the asset has been building higher highs and higher lows since August, generally regarded as a bullish formation.
This upward trend, characterized by both lows and highs progressively increasing, may suggest that the market is set for a more sustainable price recovery.
Dent’s mention of the Coinbase Premium Index adds further credibility to this outlook, as elevated premiums on Coinbase frequently signify heightened buying pressure from institutional investors in the US. The analyst anticipates this upward momentum to persist in the short term if the current trends continue.
Featured image created with DALL-E, Chart from TradingView
