Bitcoin (BTC) price is up 28% in the past 30 days and 36% at its weekly high. After the first interruption of the cryptocurrency over USD 12,000 since September 2019, sentiment remains optimistic. Many fundamental factors point to a long-term long-term uptrend for Bitcoin. Bitcoin has a favorable macroeconomic environment with the falling US dollar and increasing demand for gold. The main cryptocurrency has risen steadily with the US stock market and gold, which shows a steadily increasing appetite for BTC.
Bitcoin also has strong technical factors influencing sentiment in the cryptocurrency market. The hashrate of the Bitcoin blockchain network is again at an all-time high, indicating a stable mining industry. The closing price of the weekly BTC candle above $ 11,900 shows a strong upward trend after the weeks of consolidation in June.
On August 19, the price of Bitcoin fell from $ 12,486 to $ 11,611, showing a sharp setback in a fundamental resistance zone. Last August, Bitcoin’s price briefly crossed the same resistance by $ 12,300 before retreating.
With Bitcoin’s abrupt rejection at $ 12,400, traders seem to be anticipating a steady phase of consolidation over the next few weeks that will cool the futures market, neutralize funding rates and provide the market with a solid foundation for a sustained recovery.
The term “refinancing rate” refers to the mechanism used by bitcoin futures exchanges to establish market equilibrium. When the market is mostly long, long contract holders have to compensate short holders. When the funding rates are too high, the price of BTC stagnates as it is less convincing to extend the market.
Short term bitcoin trend
Based on various metrics and the Bitcoin rally pausing at a fundamental level of resistance, cryptocurrency traders say BTC is likely to stay in the current price range. Michael van de Poppe, Amsterdam stockbroker and Cointelegraph employee, believe that BTC could stagnate for the entire month of August and possibly well into September, which means that altcoins could benefit from the benefits, at least in the short term: “The general scenario is that we will fluctuate a bit here before continuing the downward momentum. In general -> all [altcoins] (the little ones) continue to do well.“”
A small short-term pullback would be a healthy reset in Bitcoin price, especially when funding rates are factored in. Before the crash, the funding rate for Bitcoin futures contracts on BitMEX and Binance Futures was approaching 0.0864% and 0.1199%, respectively.
When funding rates are this high, Bitcoin and other major cryptocurrencies can become vulnerable to potentially long compression. So, A period of stabilization, complemented by a small pullback and a decline in funding rates, could benefit Bitcoin’s long-term trend.
Taking into account numerous factors including the positive adjustment in refinancing rates, derivatives trader Cantering Clark said the trend for BTC is generally positive, but that uncertainties are gradually building up in the crypto market after the BTC crash. One day to another. When sentiment around Bitcoin turns cautious after weeks of recovery, it is generally bullish. according to Clark:
“That’s good, it’s already happening. The charts are coming out. Uncertainty is brewing. ‘Distribution’, 7,000 calls, top, etc., etc. Bring it to the sidelines, change funding, then break it again.” “
Similarly, Bitazu Capital’s founding partner Mohit Sorout said the recent pull-out would cool the overheated derivatives market. The futures market outperformed the spot market in July, as BitMEX Research and CryptoCompare show. If the crowded futures market begins to calm down, it could further bolster BTC’s uptrend. Mohit also said: “Chill the overheated derivatives here for a few days and then take us to the promised land“.
Long-term, researchers, especially on-chain analysts, are optimistic about the trend for Bitcoin due to the inflow of institutional capital into Bitcoin, more wallets with BTC and a decline in Bitcoin reserves on the exchanges. All three data points indicate that fewer retail investors are currently willing to sell BTC at current prices. according to Glass node: “The Unrealized Net Income / Loss (NUPL) has broken back into belief zone for the first time in over a year. Its current value is below its last value of $ 12,000, which suggests that further price increases are possible from here.“”
Although the momentum for Bitcoin in general remains strong as institutions like Microstrategy buy more BTC and retail investors continue to withdraw their Bitcoin from the exchanges, Whales or miners who might sell their BTC remain a lingering threat.
As Cointelegraph previously reported, Whale clusters range in macro resistance from $ 12,000 to $ 14,000, with $ 12,000 representing a profit or breakeven point. Whales do not usually sell when they break below their breakeven point, but expect sufficient liquidity in the market. Similar trends were seen in October 2019 and February 2020, when BTC fell sharply from $ 10,500.
As the on-chain data report produced by OKEx shows, traders are starting to look at the $ 10,000 level as an area of strong support. The exchange found that many traders closed their old positions from $ 6,200 to $ 9,700 and created new positions from $ 10,000. Since Bitcoin has held above $ 10,000 for an extended period of time, the likelihood of another rally is likely to increase: “Many of the older positions (between $ 6,200 and $ 9,700) were recently closed (over the past seven weeks) to profit, easing downward pressure on the price of BTC“.
Speaking to CNBC, Dave Chapman, CEO of BC Group, spoke said that the company sees traditional financial investors joining the crypto space: “OSL sees institutional investors and traditional financial institutions struggling to participate in Bitcoin, Ethereum, and the wider digital asset space.. “
Is the trend favoring the alts?
A constant theme in the Bitcoin rally since early June has been the boom in the altcoin market. Due to the interest in decentralized financing (DeFi), some altcoins have surpassed BTC in the past few weeks. Yearn Finance (YFI), Chainlink (LINK), Band Protocol (BAND) and Aave (LEND) saw two to ten-fold increases.
Researchers at Santiment, an on-chain analytics firm, believe the so-called altcoin season “is about to end”. In this case there are two scenarios: profits flow to stablecoins and the market corrects or profits flow to bitcoin:
“The alts will enjoy the party, one at a time, the crazy money will wander from one to the other, there are still some alts to pump out (although their numbers keep getting smaller). […] After the process is over, we either go down together or Bitcoin goes up on its own. “
In the medium and long term, on-chain analysis and the trend of altcoins suggest that Bitcoin’s support level of $ 10,000 could be maintained. A prolonged period of accumulation above a key level could catalyze another rally for BTC in the final quarter of 2020.