Bitcoin (BTC) recent price action suggests a pivotal moment in market sentiment, with technical indicators pointing to a potential reversal from bearish to bullish momentum. Traders are closely monitoring key metrics such as the Directional Movement Index (DMI) and Net Unrealized Profit/Loss (NUPL) to gauge the next big move.
BTC DMI Points To Growing Bullish Momentum
The DMI, which measures the strength and direction of trends, reveals an intriguing shift. For weeks, the negative directional line (-DI) has dominated, reflecting strong selling pressure. However, the tide seems to be turning as the positive directional line (+DI) shows gradual improvement, hinting at rising buying interest.
Meanwhile, the Average Directional Index (ADX)—the yellow line in the DMI—has been climbing, signaling an increase in trend strength. If the +DI overtakes the -DI, it could confirm a shift toward a bullish trend, potentially leading to a breakout in BTC’s price.
NUPL Suggests Mixed Sentiment Among Investors
Bitcoin’s Net Unrealized Profit/Loss (NUPL) provides insights into market sentiment. In late September, NUPL climbed above 0.50, indicating growing optimism as more investors were in profit. This typically suggests the market is entering a “belief” phase, where confidence builds among holders.
However, the recent dip below 0.50 reflects a shift back to caution, possibly driven by BTC’s price fluctuations. If NUPL continues to decline, it could increase selling pressure as investors grow wary of holding assets in a volatile market. Conversely, if Bitcoin stabilizes or rebounds, optimism may return, pushing the NUPL higher again.
BTC’s Exponential Moving Averages (EMAs)—a key indicator for identifying trends—are currently aligned in a bearish pattern, with short-term EMAs below long-term ones. However, short-term EMAs are starting to rise, hinting at the potential formation of a “golden cross”. This bullish signal occurs when a short-term EMA crosses above a long-term one, often signaling the start of an uptrend.
If Bitcoin’s momentum continues, BTC could test resistance at $64,700. A successful breakout may drive the price toward $66,500, representing a 7.2% gain. On the flip side, if the bullish scenario fails to materialize, BTC may retest support at $59,000. A breakdown below this level could push prices as low as $57,000, potentially triggering an 8% correction.
Also Read: U.S. Spot Bitcoin ETFs Surge With $253.6M Inflow After 7.3% Bitcoin Rally
Bitcoin at a Crossroads
Bitcoin’s current technical indicators suggest the market is at a pivotal juncture. While the DMI hints at growing bullish momentum, the NUPL reflects uncertainty among investors. A breakout above resistance could mark the beginning of a new uptrend, but a failure to sustain momentum might keep BTC under pressure.
As traders and investors remain on edge, the next few days could be crucial in determining whether BTC rebounds toward $66,500 or falls further toward key support levels.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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