Key takeaways:
Traders expect a Bitcoin price pullback to $90,000, but a bull flag could break out to new highs if profit taking near the range highs reduces.
On-chain data suggests the current profit taking is too weak to extinguish Bitcoin’s current price momentum.
Bitcoin (BTC) price has spent the bulk of the week pinned below $104,000 to $105,000, which many analysts have labelled as a resistance zone, but an alternative view suggests that BTC is simply consolidating within a bull flag.
A bull flag is a continuation pattern that is characterized by a period of sideways price action following a sharp uptrend, and when the structure confirms or breaks from the trendline resistance, the uptrend continues.
BTC/USDT 1-day chart. Source: TRDR.io
While the range-bound trading portion of the flag is said to represent indecision from buyers and sellers, in this scenario, the absence of buy volume is the primary culprit. As shown in the TRDR.io chart below, Bitcoin’s explosive move to $105,900 from $74,400 was accompanied by large liquidations in the margin markets and robust spot volumes, which aligned with several days of billion-dollar spot BTC ETF inflows.
BTC/USDT 1hr chart. Source: TRDR.io
During this three-week period, several US-based and international companies also announced plans to purchase Bitcoin and establish BTC treasuries. The spot and futures cumulative volume delta, along with the open interest metric on the chart show traders selling near the range highs and the absence of new long leverage and significantly sized spot positions being opened in this area, whereas drops to range low (bull flag support) sees bids filled on the spot side, but there is still limited use of margin for fresh longs.
BTC/USD spot and margin CVD. Source: TRDR.io
Bitcoin’s recent cool-down phase is a normal outcome after the near 40% recovery that started on April 8, and the loss of upward momentum resulting from profit-taking in futures markets near the current range high is also to be expected.
Bitcoin short-term holder supply profit and loss data from Glassnode supports this view, as shown in the chart below….
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