Bitcoin took a hit recently due to rising tensions in the Middle East. Israel’s actions triggered a sell-off across global markets, with Bitcoin dropping over 5% and briefly dipping below key support levels. Despite the volatility, some analysts remain optimistic.
A Key Indicator Points to a Potential Buy Signal
Analyst Axel Adler points to a crucial on-chain metric: the Advanced Net UTXO Supply Ratio. This ratio recently dropped sharply from 0.96 to 0.806. Historically, a sustained drop below 0.80 often signals a buying opportunity, preceding significant price increases. If this trend continues, it could be a classic “buy signal.”
Bitcoin’s Price Action: A Tightrope Walk
Bitcoin is currently trading around $104,000-$105,000. A break above the previous all-time high of $112,000 could send it soaring. However, several factors are creating uncertainty:
- Geopolitical Risks: The Middle East conflict is a major concern.
- Inflation Fears: Persistent inflation continues to worry investors.
- Rising Treasury Yields: Higher yields on US Treasury bonds make them more attractive than riskier assets like Bitcoin.
A Crucial Support Level
Bitcoin is currently holding above a key support level between $103,600 and $105,000. This area has acted as both support and resistance in the past. Holding this level is crucial for a potential move back towards $109,300. However, a break below $103,600 could lead to further price drops. The 50-day and 100-day moving averages also provide additional support levels to watch.
The Bottom Line
While the situation is volatile, Bitcoin’s ability to hold above key support levels suggests resilience. The Advanced Net UTXO Supply Ratio offers a potentially bullish signal, but the overall market sentiment remains cautious due to global uncertainties. Whether Bitcoin consolidates and breaks out or enters a deeper correction depends largely on whether it can maintain its current support levels.