Bitcoin’s Rally Faces Potential Stagnation Amid Rising Sell Pressure, Warn Coinbase Analysts

• Bitcoin’s recent surge may face a hurdle due to increasing sell pressure, according to Coinbase analysts.
• Both QCP Capital and Coinbase foresee a potential range-breakout in the fourth quarter of 2024.
• A staggering rise in BTC saw it hitting a monthly peak at $67.3k, even as U.S. equities experienced a downturn.

BTC’s current bullish streak might confront significant resistance as sell orders pile up, analysts warn.

Potential Stumbling Block for Bitcoin’s Rally

Despite Bitcoin’s recent uptick, the surge might encounter resistance due to increased sell orders. Coinbase analysts have highlighted that recent gains in BTC could prompt profit-taking, which in turn could cap upward momentum. The exchanges’ weekly market commentary noted an uptick in total sell orders within a 5-10% range of the mid-price, indicating a rising inclination among market participants to sell as the price appreciates.

Understanding Market Depth and Its Implications

Market depth is an essential metric for traders, indicating the volume of buy (bid) and sell (ask) orders at different price levels. The latest data from Coinbase exposed a sharp drop in market depth between July 16-18, accompanied by an increase in sell orders. This scenario suggests heightened sell pressure, which could temporarily suppress Bitcoin’s price in the short run.

Increased Sell Volumes Across Exchanges

Notably, the trend of high sell volumes wasn’t limited to just one platform; it was prevalent across various exchanges, especially in the derivatives market. Data from CryptoQuant showcased a decline in the Taker Buy Sell Ratio on Saturday, reflecting a bearish market sentiment. This metric, calculated by dividing buy volumes by sell volumes, had dipped below 1, indicating that sell volumes overshadowed buy volumes at the weekend.

Forecasts from Analysts Pointing Towards Mixed Sentiment

Coinbase analysts have mentioned that the current profit-taking aligns well with their forecast for a volatile Q3 2024, marked by range trading. However, they maintain an optimistic outlook for Q4 2024, suggesting that there still lies potential for a rally. This sentiment is echoed by QCP Capital analysts who, in a recent communication with their Telegram community, projected a significant breakout nearing the U.S. elections. They pointed out that while the market might range in the short term, it is poised for substantial movements driven by election-related factors.

Critical Price Levels to Watch

As of now, Bitcoin has yet to break through critical resistance at roughly $67.5k, marked by a daily breaker block. Nonetheless, if the bulls manage to overcome this barrier, a rapid move towards the range-highs of $71k appears probable. This key price level will be crucial in determining the cryptocurrency’s short-term trajectory.

Conclusion

In summary, Bitcoin’s current rally is on shaky ground with rising sell volumes threatening to cap gains. Analysts from Coinbase and QCP Capital present different yet converging views; while they forecast a choppy Q3, the anticipation for a robust Q4 remains strong. Investors should closely monitor key resistance levels and market depth indicators to gauge future movements better.