Bitcoin price (BTC) is showing signs of a fresh rally as it breaks the $ 40,000 resistance zone. A combination of upbeat data points on the chain and preferred market structure is leading analysts and traders to anticipate an imminent breakout of the bitcoin currency to an all-new high.
In the short term, the $ 38,000 and $ 40,000 levels remain the biggest obstacles for Bitcoin. The longer it takes BTC to break $ 40,000, the possibility of a potential correction is imminent. Hence, it is crucial that Bitcoin crosses the $ 40,000 mark and remains above it for the foreseeable future. Bitcoin has already spent nearly three weeks below $ 38,000, causing the short-term price cycle to stagnate and lose momentum. On February 6, Bitcoin finally breached the $ 38,000 level, making it a support level.
One of the positive data points on the chain that increases the chances of a Bitcoin hack is the increase in whale addresses. Santiment Analysts He said Bitcoin whales continued to accumulate despite the increase in the asset price: “Bitcoin whales # (1,000+ BTC addresses) have not stopped accumulating, while middle-class traders (10-1,000 $ BTC) have not stopped accumulating. You stop taking profits as the price hovers around $ 38,000. Meanwhile, the #FOMO’ing little headlines are again fast! ”
Bitcoin accumulation by whales coincides with large inflows from Coinbase, usually indicating that high net worth investors are buying Bitcoin. A Twitter pseudonym merchant known as Johnny advertiser: “It is a coincidence that we have seen huge amounts of BTC being withdrawn from coinbase. The first bull market correction for 2021 is now over.”
Scott Melker, cryptocurrency dealer, Indicated On top of optimistic data and fundamentals on the chain, Bitcoin is showing a favorable technology market structure. He explained that Bitcoin is seeing a “massive bull flag” structure, which, when triggered, could see BTC reach $ 63,000 in the foreseeable future: “$ BTC is likely to break a huge bull flag that would technically send the price up to $ 63,000., Expressing optimism about the short-term price cycle of Bitcoin.
What about Bitcoin in the near term?
Speaking to Cointelegraph, Jay Hirsch, managing director of the United States of the eToro social trading platform, said there is an ongoing capital turnover from Bitcoin to decentralized financing and other alternative currencies. The market has become full of risks, with tokens associated with DeFi rising 30% to 100% in one day. The desire to buy altcoins, which are seen as higher-yielding, higher-risk bets, has slowed Bitcoin’s momentum.
However, Hirsch noted that long-term sentiment towards Bitcoin remains bullish. He explained that Bitcoin has been band-tied for a while, which means it has been trading in a narrow range. Hersh said that this would change if the bitcoin price reached more than $ 40,000, because it would lead to higher interest in Bitcoin in a short period. Based on options market data, Hersh said there is a lot of open interest at $ 52,000 and $ 56,000 that Bitcoin could turn to next. he added:
I would be surprised if Bitcoin did not exceed $ 40,000 in the coming months. There really aren’t any support levels at this price because it has been trading there for a very short time. However, options placement can be a good place to look when trying to find some insights into where professional traders are seeing market movement.
Bitcoin remained stagnant over the past week as the decentralized finance market outperformed the major cryptocurrencies, including Bitcoin and Ether (ETH). Hirsch said that many investors, including institutions, have seen opportunities for higher-paying games in the DeFi market. Accordingly, he said that Bitcoin profits had been diverted to alternative currencies, leading to an “alternative season”. However, in the long term, Hirsch believes that the profits will likely return to Bitcoin, explaining:
“This capital rotation, often called an ‘alternate season,’ is popular in the wake of Bitcoin reaching new highs and is often followed by a sale in these assets to BTC. In the short term, sentiment is neutral, and this can be seen in Bitcoin’s limited range trading in Recently, however, long-term sentiment remains bullish, as evidenced by PayPal’s acceptance during this week’s earnings call that they were surprised by the volume of crypto asset transactions on their platform.
Strategists expect a clean break of $ 40K
Investors, researchers, and strategists at Bequant, Lmax Digital, and CrossTower told Cointelegraph that they expect Bitcoin to successfully rise above $ 40,000 just like the massive increase in demand in December 2020. They believe that the recent consolidation of Bitcoin does not show a weakening of its price trend.
Dennis Vinokurov, head of research at cryptocurrency trading and brokerage platform Bequant, said that BTC staying below $ 38,000 for an extended period showed an “effective price discovery”, which in the past led to a “sharp reversal due to lack of price information.” He further added that once the $ 40,000 level was broken, it would be difficult to predict what would happen next:
“There is very little information to continue since previous highs is the normal transition level. But, after that, everything goes, and the next move is anyone’s guess.”
Chad Stinglas, head of trading at cryptocurrency investment platform CrossTower, said that after Bitcoin surpasses $ 40,000, it will see an explosive bullish move. Bitcoin experienced a similar scenario in December 2020, when it struggled to exit $ 30,000. Once that happened, it saw a fairly quick move to an all-time high of $ 42,000. According to him:
“If new investment demand can eat through this wall of selling interest, and Bitcoin hits 40,000 again, and especially if it hits all-time highs, I expect that the size of these risk-reducing sellers will quickly evaporate, and that could pave the way for a leg. Other higher. “
Joel Krueger, cryptocurrency strategist at the institutional cryptocurrency exchange Lmax Digital, believes that Bitcoin could rise to the $ 40,000 level, which represents a more “meaningful” resistance area. He noted that “the current price action indicates consolidation in the wake of a significant rally,” stressing that the consolidation was good for Bitcoin.
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However, he was more cautious in expecting Bitcoin’s bullish move to continue after breaking the $ 40k mark, saying, “We don’t think the market should expect a meaningful bullish continuation beyond $ 40,000 so far.” According to him, “weekly and monthly technical studies are still tracking in the extreme overbought zone,” indicating that Bitcoin is entering a risky territory.