Traders speculate on what will happen to the price of Bitcoin after the $ 11,400 rally
The price of Bitcoin surpassed $ 11,400 dollars after an overnight bull run, while traders discuss the next direction BTC will take. Bitcoin’s price officially topped $ 10,400 on July 27, thus breaking a multi-year range. Traders are now undecided on where the price of Bitcoin (BTC) will go, as many indicators and data show conflicting trends.
The overall sentiment around Bitcoin and the cryptocurrency industry has remained positive since April. The U.S. Office of the Comptroller of the Currency has granted banks permission to operate cryptocurrency custody services, institutional investors are continually investing in Bitcoin and other major cryptocurrencies through Grayscale, and more recently, stablecoin Tether ( USDT) has seen its highest influx in eight months.
The combination of strong fundamental factors related to regulation and infrastructure seems to have improved the perception of Bitcoin by the majority. This coincides with an increase in liquidity caused by the high flow of Tether and the recovery of open interest in the futures market. Tether’s increasing influx is an important measure because it is the largest stablecoin in the cryptocurrency market. The figures suggest that the demand for the stablecoin is increasing, indicating a growing appetite for crypto assets. Some macro factors could have stimulated the demand for Bitcoin in recent months.
Since April, the US dollar has been declining relative to other major reserve currencies. Investors like billionaire Ray Dalio have singled out the current dispute between the US and China as the biggest factor. As the US dollar has been declining, the price of gold has increased. Historically, a weak dollar causes the stock market to underperform, which in theory would boost gold. Given the recent price correlation between gold and Bitcoin, there is a chance that a weak dollar will indirectly benefit BTC.
Based on the market structure, traders expect Bitcoin’s price to fluctuate in the short term. BTC has broken a critical resistance level of $ 10,500 dollars. After such a strong price move, some stability would cool the market. Michaël van de Poppe, a full-time trader on the Amsterdam Stock Exchange and contributor to Cointelegraph, said Bitcoin may soon find a new range. Considering that $ 12,000 has acted as a strong level of resistance in the past, van de Poppe suggested that a range of $ 9,700- $ 12,000 could materialize. As Bitcoin saw an explosive upward movement in prices, trading volumes increased in parallel. According to Skew, July 27 was the second-highest-volume day in Bitcoin’s history. As BTC is emerging from an unprecedented rally, below is an overview of the bullish and bearish scenarios that could impact price in the short term. Bullish scenarios for Bitcoin in the short and medium term
Some traders and investors forecast a continuation of the current Bitcoin rally. According to the cryptocurrency trader known as Ethereum Jack, BTC has recently had a clean breakout. He noted the fifth hike to a resistance level that has been sustained since September 2019. The trader emphasized that Bitcoin’s price trend could be overextended if the rally resumes, but noted that it has all the characteristics of a prolonged bullish trend: “$ BTC giving the cleanest breakout-retest setup I’ve seen in a long time while every corrective wave since 4K has been a vertical re-build. This has all the characteristics of a strongly extended fifth – other than BTC generally loves the extended fifths. “
Trader Koroush AK commented that Bitcoin currently has three bullish arguments. First, the Fibonacci level of 0.618 measured between $ 9,300 and $ 11,421 has to hold. The 0.618 level marks an important level in the Fibonacci retracement system, and generally leads to a reversal of the trend when it breaks. Second, the $ 10,400 level acts as a robust horizontal support. Third, as long as the $ 10,170 level is maintained, the argument for a higher declining level is intact.
In layman’s terms, Koroush AK believes that if the Bitcoin price stays above $ 10,170, $ 10,400, and $ 10,622, the price trend will continue to be bullish. The $ 10,170 level, or a higher low, is particularly critical in the technical analysis as it suggests a strong uptrend. A top-bottom pattern is formed when the most recent bottom point of an asset is higher than the previous bottom points.
Similarly, the Bitcoin trader known as Satoshi Flipper suggested that there is little resistance between $ 10,886 and $ 11,400. As BTC just emerged from a break above $ 11,000 for the first time since August 2019, traders seem to anticipate volatility in the new range.
Aside from the fundamentals, tech researcher Kevin Rook emphasized that Bitcoin’s “HODLing” level is at a record high. That 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 claiming: “62% of Bitcoin’s supply (11,400,000 BTC) has not moved in at least a year. Speculators are gone, HODLing is in its highest point. ” The first major breakthrough in almost 11 months, a rise in long-term BTC holders and a favorable market structure reinforce Bitcoin’s bullish outlook.
bearish asos for BTC in the short term
However, in the short term, some traders expect a cooling in the cryptocurrency market. Following a huge rise in Bitcoin prices, various measurements suggest that the rally is overextended. The most important measure of all is probably the financing rate.
Bitcoin futures contracts with no expiration date are called perpetual exchanges. They are the most widely used futures contracts in the cryptocurrency market, as they are less difficult to trade. But the lack of expiration dates is balanced by a mechanism called financing, which forces holders of long or short contracts to pay their counterpart a fee every eight hours, depending on market sentiment.
When the financing rate of Bitcoin’s perpetual exchanges turns positive, it means that the majority of the market is waiting for the price of BTC. For example, BitMEX showed a funding rate of around 0.077% for Bitcoin’s perpetual exchanges in the past two days. This shows that the vast majority of the market is craving for BTC, leaving the cryptocurrency sensitive to a potential long contraction.
Some traders claim that the financing rates of perpetual exchanges are simply too high to be sustained. Referring to financing rates, the trader known as Byzantine General said, “This needs to cool down a bit.”
As for the structure of the market, Bitcoin’s technical analyst Crypto Capo said that BTC could confirm its uptrend if it stays above $ 10,500 and sets it as a clear support level. But if BTC rejects in the short term and falls below the level, he said there is a possibility of a UTAD forming. A UTAD, which stands for “upthrust after distribution”, is a pattern that is part of the Wyckoff Method. It is formed when an asset has a counterfeit and is removed. Several traders believe that there is still a small chance that the entire BTC uptrend is a bogus rally. StockCharts describes a UTAD as: “A UT or UTAD allows high interests to mislead the public about the direction of the future trend and subsequently sell additional shares at high prices to those breakout out traders and investors before the trend begins bass player”.
Another well-known cryptocurrency trader known as CryptoWhale said the sentiment around the Bitcoin market is too fearful. The trader noted that the BTC rally comes after “months in the red” and that the cryptocurrency is likely to see a rectification.
Overall, the market appears to be divided between traders who believe the rally is over-extended and those who see an extension. There are viable reasons to support both arguments, as funding rates signal an overheated market and BTC stability above $ 10,500 indicates strong momentum.
Disclaimer: This press release is for informational purposes information does not constitute investment advice or an offer to invest. The views expressed in this article are those of the author and do not necessarily represent the views of infocoin, and should not be attributed to, Infocoin.