The Bitcoin (BTC) price has dropped by approximately 9% since it briefly touched $72,000 on March 25. As a result, all gains from the past 30 days have been lost again, and Bitcoin is now at -2.6% this month. The price has hardly moved in the past 24 hours and is fluctuating around $66,900.
This decline resulted in a bearish breakout of a pattern on the 12-hour chart. However, a hidden bullish divergence indicates that a bounce may be possible in the short term. Whether this bounce will be strong enough to break through the supply above depends on the on-chain data.
Head-and-shoulders breaks down on the 12-hour chart.
On the 12-hour BTC price chart, a head-and-shoulders pattern is visible that has been developing since the end of February. The neckline was around $67,700, and the breakout occurred on March 27.
Want to receive more of these token insights? Sign up for the daily crypto newsletter from editor-in-chief Harsh Notariya here.
On paper, the measured movement of the pattern indicates a correction of 12% from the neckline. If this happens, the Bitcoin price will drop below the psychological barrier of $60,000, bringing the region around $59,400 into view.
However, the Relative Strength Index (RSI), a momentum indicator, gives a different signal. Between February 28 and March 27, the price made a higher low, while the RSI showed a lower low.
This hidden bullish divergence, which usually indicates a continuation of the trend, has already caused a bounce of 1.87% from the recent low.
The divergence indicates that support at $65,000 can hold for now. However, there is a large supply just above the price, and the whales, who usually create upward pressure, seem to have less conviction now.
More than 6% of the supply is between $66,900 and $69,400.
The UTXO Realized Price Distribution (URPD), a Glassnode metric that shows the price at which the current supply was last traded, displays three dense clusters just above the current price.
At $66,900 (almost equal to the current price), about 2.37% of the total BTC supply was last traded. At $68,100, another 1.96% lies, and at $69,400 another 1.96%. In total, about 6.29% of the BTC supply is concentrated in a range of $2,500 just above the current Bitcoin price.
These clusters act as resistance, as hodlers who bought at those prices and are around break-even often sell at a bounce to exit without much loss.
The behavior of whales confirms how important these Bitcoin supply zones are at the moment. The largest group of whales with between 100,000 and 1 million BTC has reduced their amount from 675,200 to 670,000 on March 24, a decrease of 5,200 BTC.
The group below (10,000 to 100,000 BTC) first decreased and then increased again, keeping the balance roughly stable at 2.25 million. Only the smallest whale group (1,000 to 10,000 BTC) has slightly increased their holdings, from 4.21 million to 4.22 million.
In total, approximately 4,800 BTC were added across all three groups. However, the conviction behind this number is less strong than it seems.
The largest wallets, which have the most influence on the market, have reduced their position by 5,200 BTC. The net increase of 10,000 BTC in the smallest group does not compensate for this in terms of trend direction, as large sales from whales are usually a sign of weakness, while purchases by smaller groups are often absorbed by the available supply.
This means that any potential bounce due to the hidden bullish divergence is likely to stall in the area between $66,900 and $69,400 (the previously mentioned warning zone).
Bitcoin price expectation and the $66,600 barrier.
The most important level for Bitcoin at the moment is $66,600. If the price stays above this, it means that the supply just above the price has not yet triggered massive sales. If there is a bounce here, it could go towards $68,700 and even the psychological barrier of $70,000.
However, Bitcoin must first break through all three supply clusters to reach $70,000. Due to the weak conviction of the whales, every rally below $70,000 remains vulnerable to a new wave of selling. The bearish structure only weakens above $72,000, the high of the right shoulder.
If Bitcoin drops below $66,600, the path opens up to $65,200 and $63,300. Below that, the head-and-shoulder movement of about 12% indicates a price target around $59,400. This means that Bitcoin could drop below $60,000 for the first time since the lows of February.
For now, $66,600 forms the boundary between a small rally towards $69,400 and a downward movement below $60,000.