Executive Summary
The Story So Far
Why This Matters
Who Thinks What?
Bitcoin experienced a significant recovery, rallying to $113,900 on Wednesday after briefly dipping below $111,000 during the Asia trading session. This rebound was primarily driven by emerging bullish divergences on the Relative Strength Index (RSI) across one-hour and four-hour charts, coupled with observations of record-low implied volatility, signaling a potential shift in market momentum.
Technical Indicators Point to Reversal
The swift recovery followed Bitcoin sweeping below Monday’s low of $111,500. A bullish divergence, characterized by the price forming lower lows while the RSI registers higher lows, often indicates a weakening of bearish sentiment and the possibility of a trend reversal.
The bounce also coincided with Bitcoin retesting its daily order block, which could serve as a technical base for further upward movement. For stronger confirmation of a bullish shift, analysts suggest a four-hour candle close above $113,400 and a reclaim of the 200-period exponential moving average (EMA) on the four-hour chart.
Trader Sentiment Mixed
Crypto traders offered varied reactions to Bitcoin’s recent price action. MN Capital founder noted the strength of the rebound, stating it was a “Good sweep of the lows for Bitcoin and it holds up,” adding that breaking the 4H 20 EMA would be beneficial for upward momentum.
Conversely, another crypto trader cautioned that Bitcoin must reclaim the $113,400 to $114,000 range with conviction. Failure to do so, according to the trader, could lead to recent gains unraveling and a potential drop back towards $107,000.
On-Chain Data Presents Diverging Signals
While short-term recovery gains traction, broader on-chain trends reveal a more complex picture. Cointelegraph previously reported that whale entities, holding 1,000 BTC or more, have sold approximately 147,000 BTC, valued at $16.5 billion, since Bitcoin’s all-time high above $124,500 in August.
This 2.7% reduction in whale holdings suggests sustained selling pressure from large investors, which is often interpreted as a potential headwind for price recovery.
Low Volatility and Tightening Supply
Despite whale distribution, other market indicators suggest an unusually quiet environment. XWIN Research highlighted that Bitcoin’s implied volatility has dropped to its lowest levels since October 2023, a period that preceded a significant 325% rally from $29,000 to $124,000.
This analysis described the current setup as a potential “quiet before the storm,” implying that low volatility and muted trader positioning might be accumulating momentum for a decisive market move. Supporting this view, CryptoQuant data indicates exchange reserves are hovering at multi-year lows, suggesting fewer coins are available for selling.
Additionally, Bitcoin’s Market Value to Realized Value (MVRV) ratio remains near the neutral zone. This implies limited pressure for either widespread panic-selling or aggressive profit-taking from investors.
Key Takeaways
Bitcoin’s recent rally to $113,900 is technically supported by bullish divergences and historically low volatility, hinting at a potential trend reversal. However, the market remains caught between ongoing selling pressure from large whale entities and a structural backdrop of tightening supply and reduced exchange reserves, setting the stage for a potentially significant price movement.
