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After Bitcoin visits $ 8.6,000, traders predict Bitcoin’s next freeze

May 27, 2020

The price of Bitcoin (BTC) dropped to just $ 8,600 on May 25 as retail Coinbase investors led an abrupt short-term downtrend. The price has fluctuated between $ 8,800 and $ 9,200 since then, showing high volatility in a narrow range.

Bitcoin is currently at a turning point It could drop below the $ 8,000 support level and fall back into the $ 6,000-7,000 range or break above $ 10,500 and start a new upward cycle.

The top cryptocurrency traders remain mixed in the current Bitcoin trend. Some believe that BTC is heading for at least $ 7,100. Such a decline would stabilize the market and create a stronger foundation for Bitcoin’s recovery. Others predict a week or two in the low $ 9,000 region before a break of over $ 10,000 and a possible medium-term increase of $ 14,000, $ 17,000 and $ 20,000.

Bullish scenario for Bitcoin

After Bitcoin visits $ 8.6,000, traders predict Bitcoin’s next freezeAfter Bitcoin visits $ 8.6,000, traders predict Bitcoin’s next freeze

Bitcoin’s short-term bullish scenario is fairly simple. BTC has to rise above $ 10,600 to break its previous highs in October 2019 and February. So that a new upward trend can begin, BTC must maintain its momentum above $ 9,000 and exceed $ 10,600and finally peaked above the USD 11,000 resistance level. Bitcoin options dealer Theta Seek wrote::

“I’ve seen a lot of bearish tweets, but I think these are the last 1-2 weeks in which you can NEVER buy #BTC for under $ 9,000.”

When the price of Bitcoin stays over $ 9,000 through June 1 and reaches a monthly closing price above $ 9,000would increase the likelihood of a significant recovery toward the third quarter.

An important point that supports the bullish theory is the reluctance of Bitcoin holders to sell. In the past two months, the price of Bitcoin has almost tripled from $ 3,600 to $ 10,080. However, the chain’s data shows that investors are unwilling to sell at this price. Cryptocurrency analyst Philip Swift said::

“”60% of all Bitcoin have not been on the blockchain for at least 1 year. This is an indication of significant hodling. The last time this happened was in early 2016, at the beginning of the bullish phase“”

Hodl Wave shows that Bitcoin investors don’t want to sell. Source: Philip Swift

The market data analysis and blockchain company IntoTheBlock found a similar pattern. The researchers said the number of large Bitcoin transactions has dropped significantly since May 19. The decline in large transactions indicates that whales or large single BTC holders are not selling. The explorers they explained::

“”The number of large transactions over $ 100,000 for #Bitcoin decreased continuously from 9.71,000 transactions on May 19 (1.04 million #BTC and 10.93b) to 8.94,000 transactions on May 26 (move from 798, $ 54 thousand BTC and $ 7.07 billion)“”

In addition, Scott Melker, a cryptocurrency investor, found that top hedge fund managers in the financial sector began to struggle when the pandemic caused a sharp dip in equity markets. Given the high volatility in the financial market and traditional assets such as oil Bitcoin has recovered relatively well from its drop on “Black Thursday” to $ 3,600 on March 13th. milker he showed::

“My best friend runs $ 2 billion in a hedge fund. He only told me that they took most of their money off the table because the market is pointless and ‘you can’t use that much capital without conviction’. Even that big boys were slaughtered. “

As a result, the perception of Bitcoin as a paradise of value and the emerging new hedge against inflation have improved, which has led to an increase in the capital inflow of institutional investors into the Bitcoin market.

In the first quarter of 2019, the Grayscale Bitcoin Trust – an investment vehicle that institutions can use to buy Bitcoin through the public market – recorded an average weekly investment of $ 3.2 million. In the first quarter of this year, the average weekly investment was $ 29.9 million and increased nearly ten times over the year.

The Grayscale Bitcoin Trust has invested on average weekly since 2018. Source: Kevin Rooke

The increase in institutional activity in the Bitcoin market, the reluctance of many investors to sell at current prices, the decline in large transactions and the tendency of BTC to see a short squeeze on a negative funding rateAll of this points to an upward trend in prices in the short term.

Short-term bearish scenario

Bitcoin’s bearish short-term scenario is a retreat in the $ 5,800 to $ 7,100 range. Bitcoin is currently in a technically lower formation that goes back to June 2019. A “lower high” is formed when the last peak is lower than the previous high point. For example, Bitcoin peaked at $ 10,500 in February. It peaked at $ 10,080 this month, making it a lower high.

Bitcoin has hit six consecutive lower highs in the past 12 months, indicating a long-term downward cycle. If Bitcoin does not exceed $ 10,000, the likelihood that a correction will be resumed increases. A cryptocurrency market researcher known as BitDealer said about the formation of lower altitudes:

“”[Bitcoin] it doesn’t look very good. It is very interesting to me that we have not reached any of these highs considering how close the price was to them. Reminds me of how clear the LHs were [altos inferiores] Follow the top of the 20k. Until we get an HH [alto más alto], good idea to sell close to the highs / make profits on the longs. “

Lowest highs on the daily Bitcoin chart since June 2019. Source: Bitdealer

Most pessimistic theories published by traders anticipate a drop in prices in the short term and a strong recovery in the medium and long term. Bitcoin trader Nunya Bizniz suggested that BTC could have an inverted head-and-shoulders pattern, which is considered a bearish textbook indicator. However, for this to happen, Bitcoin must drop to at least $ 7,100, which is predicted by other prominent traders.

A possible inverted head and shoulder pattern is formed. Source: Nunya Bizniz

Bitcoin’s price rose from $ 8,600 to $ 9,200 on May 27, but was withdrawn almost immediately afterwards. The $ 9,200 level was a huge gap in CME. This was formed when the CME futures market closed on the weekend. Closing a CME gap could lead to a drop in price at BTC, which tends to hit the gap and then reverse it.

Variables that can affect the price

Bitcoin saw a surge in price when Goldman Sachs called a customer about Bitcoin, gold, and inflation. Talk to One of the Largest Investment Banks in the United States The prevailing cryptocurrency among its customers has led to greater expectations of greater institutional acceptance. On the slide presented to customers, Goldman Sachs reaffirmed its neutral stance on Bitcoin. The slide titled “Cryptocurrencies, including Bitcoin, are not an asset class” He said::

“We also believe that hedge funds find cryptocurrency trading attractive due to its high volatility, but this attractiveness is not a viable investment basis.”

Goldman Sachs merely said that Bitcoin shows no signs of a hedge against inflation and that the only attraction for institutes is volatility. Barry Silbert, CEO of Digital Currency Group and Grayscale, said: “I just read the slides from Goldman’s customer call about gold and bitcoin. This slide heading summarizes Goldman’s position.“”

The actual content of Goldman Sachs’ presentation on Bitcoin and Gold does not describe Bitcoin in the way that bank customers are invited to trade or invest in the asset. Consequently, The narrative that this would lead to individuals with higher purchasing power and institutional customers perceiving Bitcoin as a hedge against inflation is wrong.

Besides that, There are other smaller variables like miners who sell more Bitcoin than they mine every day after halving and increasing open interest in the Bitcoin futures market, which can create additional selling pressure.