Rebound possible after extreme deviation from moving averages

The price action in Bitcoin has been relatively muted for the past three days, and Bitcoin has stayed near $26,000 most of the time. During this period, there has not been any significant change in the number of wallets with holdings exceeding 100 BTC in balance; the same applies to wallets with holdings exceeding 1,000 BTC. As a result, we keep speculating that big players are likely still waiting for better prices (despite a nearly 20% drop in the value of Bitcoin since its July 2023 high). In addition to that, the uncertainty in global markets also does not help to propel the price of Bitcoin higher. If the stock market does not stop selling off in the very short term future (and reverses the trend), then the pressure will continue to drag risk assets like Bitcoin lower (to the area between $24,000 and $25,000). Though, we would like to note that the price of Bitcoin deviated too far from its 20-day SMA and 50-day SMA in the past few days, suggesting we might first see a retracement toward these moving averages before the next move down (especially if the stock market continues with a relief). Consequently, we are highly vigilant and expect volatility in the cryptocurrency market to stay elevated in the short term.

Illustration 1.01
Illustration 1.01 shows the daily chart of BTCUSD and two simple moving averages. The yellow arrow indicates the extreme price deviation from the 20-day SMA and the 50-day SMA.

Technical analysis gauge
Daily time frame =Bearish
Weekly time frame = Slightly bearish
*The gauge does not necessarily indicate where the market will head. Instead, it reflects the constellation of RSI, MACD, Stochastic, DM+-, ADX, and moving averages.

Please feel free to express your ideas and thoughts in the comment section.

DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.