The Bitcoin price was officially above $ 10,400 on July 27and thus broke a number of years. Traders are now unsure where the price of Bitcoin (BTC) will go, as much indicators and data show contradicting trends.
The general mood regarding Bitcoin and the cryptocurrency industry has remained positive since April. The U.S. currency auditor’s office has given banks permission to operate cryptocurrency custody servicesinstitutional investors are continuously investing in Bitcoin and other major cryptocurrencies Grayscaleand more recently Stablecoin Tether (USDT) has seen its largest influx in eight months.
The combination of strong fundamental factors related to regulation and infrastructure seems to have improved the majority’s perception of Bitcoin. This coincides with an increase in liquidity caused by the high flow of tether and the recovery of open interest in the futures market. The increasing influx of tether is an important measure as it is the largest stable coin in the cryptocurrency market.. The numbers indicate that the demand for the stable coin is increasing, lor indicate a growing appetite for crypto assets.
Some macro factors may have stimulated Bitcoin demand in the past few months. Since April, the US dollar has fallen against other major reserve currencies. Investors like the billionaire Ray Dalio have shown the current dispute between the United States and China as the biggest factor. As the US dollar has dropped, the gold price has risen. Historically, a weak dollar has underperformed the stock market, which would theoretically increase the gold price. Given the recent price correlation between gold and bitcoin There is a possibility that a weak dollar will indirectly benefit BTC.
The correlation between Bitcoin and gold in the past few months. Source: Skew.com
Based on the market structure, Traders expect the Bitcoin price to fluctuate in the short term. BTC has exceeded a critical resistance level of $ 10,500. After such a strong price movement, some stability would cool the market. Michaël van de Poppe, a full-time trader on the Amsterdam Stock Exchange and contributor to Cointelegraph, said as Bitcoin could soon find a new area. Given that $ 12,000 has faced strong resistance in the past, van de Poppe suggested that a range of $ 9,700 to $ 12,000 could occur.
A new Bitcoin rank could be formed. Source: Michaël van de Poppe
When Bitcoin saw an explosive price move up, At the same time, the trading volume increased. according to InclinationJuly 27 was the second highest volume day in Bitcoin history. As BTC comes out of an unprecedented rally, is shown below An overview of bullish and bearish scenarios that could impact price in the short term.
Short and medium term bullish scenarios for Bitcoin
Some traders and investors forecast a continuation of the current Bitcoin rally. Known as, according to the cryptocurrency trader Ethereum Jack, BTC has had a clean break recently. He signaled the fifth increase to a resistance level that has continued since September 2019. The dealer stressed that Bitcoin’s price performance may be overwhelmed when the rally resumes, however He found that it has all the features of a sustained upward trend:
“$ BTC offers the cleanest breakout retest setup I’ve seen in a long time, while every correction wave since 4K has been a vertical re-accumulation. This has all the features of a greatly extended fifth – apart from BTC, which generally loves the extended fifths . “
The dealer Koroush AK commented as Bitcoin currently has three bullish arguments. First, The Fibonacci level of 0.618, measured between $ 9,300 and $ 11,421, must hold. The level of 0.618 marks an important level in the Fibonacci retracement system and generally reverses the trend if it breaks. Secondly, The $ 10,400 level serves as robust horizontal support. Third, As long as the $ 10,170 level is maintained, the argument for a higher falling level is intact.
In simple words Koroush AK believes that If the Bitcoin price stays above $ 10,170, $ 10,400 and $ 10,622, the price trend will continue to be optimistic. The $ 10,170 level or higher is particularly critical in technical analysis as it indicates a strong uptrend. A top-bottom pattern is formed when the last lower point of an asset is higher than the previous lower points.
A short-term analysis of the key levels for Bitcoin. Source:: Koroush AK
Likewise, the Bitcoin trader is known as Satoshi pinball machine He suggested There is little resistance between $ 10,886 to $ 11,400. With BTC emerging from a break of over $ 11,000 for the first time since August 2019, traders seem to be expecting volatility in the new range.
Aside from the basics, the technology researcher Kevin Rook stressed that Bitcoin’s “HODLing” level is at a record high. This metric indicates that many BTC holders are reluctant to sell the main cryptocurrency.. This could indicate that BTC is currently in an accumulation phase with Rook affirmative: “62% of the Bitcoin offer (11,400,000 BTC) has not moved in at least one year. The speculators are gone, HODLing is at its highest point. “The first major breakthrough in almost 11 months, an increase in long-term BTC holders and a favorable market structure reinforce Bitcoin’s optimistic outlook.
Short-term declining cases for BTC
In the short term, however Some traders expect the cryptocurrency market to cool off. After a huge rise in Bitcoin prices, various measurements indicate that the rally is overwhelmed. The most important measure of all is probably the funding rate.
The Bitcoin futures contracts with no expiration date are known as perpetual exchange. They are the most commonly used futures contracts on the cryptocurrency market as they are less difficult to trade. However, the absence of expiration dates is compensated for by a mechanism called as financingThis requires long or short contract holders to pay a fee to their counterpart every eight hours, depending on market sentiment.
If the financing rate of the perpetual Bitcoin exchanges becomes positive, it means that the majority of the market is waiting for the price of BTC. For example, BitMEX has shown a funding rate of around 0.077% for the constant exchange of Bitcoin in the past two days. This shows that the vast majority of the market demands BTC and the cryptocurrency is sensitive to a possible long contraction.
Bitcoin perpetual exchange rate financing rates on major exchanges. Source: Skew
Some traders claim that the perpetual stock market funding rates are simply too high to sustain. Regarding the financing rates, the trader referred to as Byzantine general said, “It has to cool down a bit.”
Regarding the market structure, Bitcoin’s technical analyst, Crypto capo, said as BTC could confirm its upward trend if it stays above $ 10,500 and set it as a clear support level. But if BTC declines in the short term and falls below the level, he said there is a possibility that a UTAD. A UTAD, which means “Boost after distribution”is a pattern that is part of the Wyckoff method. It occurs when an asset is falsified and removed. Several traders believe that there is still little chance of the overall BTC uptrend be a fake rally. StockCharts describes a UTAD as:
“A UT or UTAD enables a high level of interest to mislead the public about the direction of the future trend and then sell additional stocks at high prices to the breakout traders and investors before the downward trend begins.”
Another well-known cryptocurrency trader known as CryptoWhale said as The mood on the Bitcoin market is too scared. The trader found that the BTC rally is after “months in the red” and that the cryptocurrency is likely to see a correction.
Usually, The market appears to be split between traders who think the rally is overwhelmed and those who see an extension. There are good reasons to support both arguments, as funding rates signal an overheated market and BTC stability above $ 10,500 indicates strong momentum.