Bitcoin’s price (BTC) rejected the $ 12,000 resistance level for the second time in the past 10 days. Traders are generally bullish on BTC’s near-term trend after its expanded consolidation below a critical resistance level.
Generally, when an asset is relatively stable near a large area of resistance, it indicates that a bullish continuation is likely.. It shows that sellers don’t have enough pressure to push BTC to a fundamental price point. Many traders appear to assume that the price of Bitcoin will stay in the $ 10,500 to $ 12,000 range. If BTC does not drop below a major support level at $ 10,500, technical analysts say the structure of the bull market will remain intact.
The coexistence of a positive global macro-context and a robust market structure are just some of the encouraging sentiments regarding Bitcoin, but investors have also raised concerns about some short-term hurdles.
A bullish continuation
The main factor in predicting a short-term bullish continuation of Bitcoin is the long-term structure of the market.. Analysts say high frequency BTC charts like the monthly chart are showing a significant breakout, with BTC escaping from an extended price range that often leads to a prolonged rally, especially if the breakout occurs on a high chart. Frequency. Raoul Pal, CEO of Global Macro Investor, explained::
“Great first few days for a likely big step as the institution is finally following what BTC retail investors have always known – that this is the future and is way below price.”
Since its peak in 2017 when it nearly hit the $ 20,000 mark, BTC has fluctuated within a multi-year price range, bottoming at $ 3,150 in 2018 as it sees a local high of $ 14,000 in July 2019, setting a three-year deadline. When the price of Bitcoin recently topped $ 11,500, it confirmed on the weekly and monthly charts that the dreaded range had been broken.. Various market data could also complement Bitcoin’s long-term uptrend.
Kyle Davis, co-founder of Three Arrows Capital, indicated that there is a small gap in the options market between $ 14,000 and $ 20,000. Citing data from the Deribit options exchange Davis said“$ BTC will soar above $ 14,000 to $ 20,000,” suggesting that a breakout above $ 14,000 could fuel the next BTC rally.
Some Bitcoin traders also emphasized that the current structure of the Bitcoin market is very optimistic. Scott Melker, a cryptocurrency trader, said that the absorption of bitcoin slumps shows that the trend of BTC is bullish: “It’s fall buying season and any opportunity to hit higher lows is welcome. This is a bullish chart, period.”
On the four-hour Bitcoin price chart published by Melker, Bitcoin recorded four higher lows or four local lows that are higher than the previous lows. A higher deep pattern in technical analysis is considered a positive formation as it shows the strength of the buyers. Bitcoin buyers have bought every drop in the past 10 days.
The positive technical factors surrounding Bitcoin have been complemented by the promotion of data points in the chain. According to on-chain market data provider IntoTheBlock, the number of Bitcoin “HODLer” increased essentially:
“The HODLING trend for #Bitcoin continues. As you can see from the graphic below, the number of BTC hodlers has increased by almost 4 million in the past twelve months. As of August 9, a total of 20.47 million addresses held 11.51 million BTC over a year. “
Short-term hurdles for BTC
In the short term, Bitcoin faces two hurdles: first, a historically relevant fractal and second, a slight decline in liquidity. Both factors could put selling pressure on Bitcoin in the short term, but compared to a few weeks ago, general sentiment regarding BTC remains positive.
Nik Yaremchuk, a cryptocurrency trader, said historical fractals indicate a short-term retreat. Compared The current price action of Bitcoin with the in May. Three months ago, BTC also saw a similar trend where the price seemed to break out and then posted a correction: “We now have a fractal since May 2020 where we’ve been in range for a while. I don’t think we will be here long but I think we will fall again. “
The fractal coincides with a slight decrease in Bitcoin’s liquidity. Market research firm Glassnode said that while transaction fees for BTC are good overall, they fell slightly last week:
“Liquidity also decreased slightly and lost 3 points due to a decrease in the transaction liquidity sub-category. This, in turn, was caused by the above-mentioned drop in the number of on-chain transactions over the past week. Overall, however, the transaction rates remain high compared to the market level before the bull market. “
Still, speaking to Cointelegraph, Denis Vinokourov, head of research at the exchange and brokerage platform BeQuant, said the rejection of Bitcoin at $ 12,000 isn’t necessarily bad.. The pattern of a rally followed by consolidation stabilizes the market and offers investors some breathing space:
“The discovery and consolidation of prices after a sharp rise is an indication of healthy two-way market flow. Rejection of prices is not necessarily a bad move as it gives market participants a chance to gauge the situation and balance the interests of both the leveraged / speculative flow and the long-term owners. “
Variables Affecting the Cryptocurrency Market
There are several variables in the coming weeks that can affect Bitcoin and other major cryptocurrencies. Probably the most important factor that could affect Bitcoin is the upward trend in altcoins.
In recent weeks Altcoins, especially in the area of decentralized financing, have grown significantly compared to the major cryptocurrencies. For example, Chainlink’s native tape protocol tokens BAND and LINK rose 348% and 88%, respectively, to their monthly highs as of August 1.
In the short term, it remains doubtful whether the profits from altcoins will flow into Bitcoin. Vinokourov noted that the market’s willingness to take additional risks with altcoins shows positive market sentiment:
Interestingly, the MVIS 100 Small Cap Index (YTD) is up 74.51% and the Large Cap Index 74.23% year to date. The willingness of the market to take more risk, as demonstrated by the flow of capital to small-cap assets, is an overall positive net result. “
The combination of a favorable long-term market structure and positive on-chain data has raised sentiment regarding Bitcoin over the long term. In the short term, however, some are forecasting a minor decline that would make the market less overheating.