Bear Market Over? Why Bitcoin Could Soar To $45K As Strong Holders Grow
01 Août 2021 - 12:00AM
NEWSBTC
Bitcoin has retaken the highs of its current range. The first
cryptocurrency by market cap trades at $41,300, at the time of
writing, with a 6% and 23.8% profit in the daily chart. The general
sentiment in the market has flipped bullish, the fear and greed
index signals greed for the first time in months. Other indicators,
as many experts have pointed out, suggest a definite shift in the
market. The bulls could see more green days in the coming weeks.
Data from Glassnode, provided by the CIO of Moskovski Capital Lex
Moskovski, recorded an increase in the amount of Bitcoin held by
“strongest holders”. According to the Illiquid Supply metric, these
holders have risen to an all-time high and suggest “bullish” price
action. Charles Edwards, a founder at Capriole Investments,
revealed an increase in long-term Bitcoin holders. According to the
HOLD Waves metric, these types of investors have been growing their
supply since the May 2021 crash. Edwards added: This type of sharp
rise never occurred in the early stages of prior bear markets,
suggesting that there is a chance the Bitcoin bull-cycle is still
intact. Additional data provided by Edwards indicates that
exchanges platforms had their “first positive outflows” since last
week when Bitcoin made a run from its yearly open at around $29,000
to its current levels. This metric suggests that the demand in the
crypto market could be returning and could support further
appreciation. Days prior to the current price action, Bitcoin
dropped from about $35,000 to its yearly open, as mentioned.
Edwards called this price action a “failed breakout”, as sellers
were exhausted at those lows and were unable to push the price
further down. He added: The ensuing squeeze to the upside was
supported by a heavily short market, with over-exposure to
stable-coin contracts. This resulted in a short squeeze over the
last week which culminated on the candle highlighted (…) Bitcoin
Fundamentals Turn Positive, Bulls Back In Control? Edwards reviewed
other indicators, such as the Hash Ribbons metric and believes it
looks “promising”. The metric saw an important decline after China
banned Bitcoin mining from the country. Miners had to migrate to
friendlier destinations. The Bitcoin hash rate and its Energy Value
has been rising. Edwards found that both of this metric grew around
8%, indicating that the miners’ migration has ended. Another
bullish factor, since these entities can stop selling BTC; the
market could see selling pressure diminish. However, investors must
remain cautious: Hash rate is showing a positive and strong trend,
not dissimilar to December 2018, suggesting the bottom could be in.
However, Hash Rate can give various false positives during
capitulation. This is why we remain cautious until the Hash Ribbon
buy signal is confirmed. In the coming days, Bitcoin could see more
accumulation around its current levels with a “higher chance” of
another leg up to the mid-range, $45,000. If BTC’s price retraces,
the invalidation zone stands at $39,000. The macro-economic outlook
presents a potential tailwind and risk for Bitcoin. Edwards claims
that the U.S. Federal Reserve and its inflationary monetary policy
could continue to boost BTC if the financial institution keeps
printing money. There is a potential risk in the traditional
market. If the stock market crashes, Bitcoin could follow. The
cryptocurrency has displayed a high level of correlation with the
S&P 500. In consequence, it could hurt its chances to reclaim
previous highs in case of a dropped. Edwards concluded: For now,
fundamentals and technicals are skewed towards the upside, and our
base case is we will move towards the mid- to high-$40Ks over the
coming weeks. In the near-term this thesis would be validated if we
breakdown below $39K. Finally, Bitcoin cycle history tells us to be
wary of significant volatility and downside risk until conditions
are further improved.
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