After rallying from $8,800 to $9,300, the Bitcoin bull has lost strength over the past few hours, with BTC recently dipping below $9,000 for the first time in days.
Some traders have said that this is a precursor to an even greater retracement for the cryptocurrency market.
One analyst wrote that “bulls need to really step up,” or else risk a retracement towards the low-$8,000s. A chart the analyst shared indicated that BTC is moving below three crucial levels of support: an uptrend formed in April, the equilibrium level of the $7,200 to $10,500 range, and an Ichimoku Cloud level.
Though, the same factor that predicted Bitcoin’s $8,100 bottom on the day before the halving is now saying that the bear trend has bottomed.
Key Bitcoin Bull Sign Flashes
A prominent crypto trader recently noted that the quarterly Bitcoin futures on the OKEx cryptocurrency exchange have begun to trade below the spot price on Bitstamp/Coinbase by a few dollars.
While this may not sound relevant, each time the quarterly futures have traded at a discount to the primary market, prices have found themselves at a local bottom. Just a day before the halving, Bitcoin bottomed around $8,100 at the same time the futures started to trade at a discount to spot.
Chart of Bitcoin and quarterly BTC futures from trader “RJ” (@RJ_killmex on Twitter)
Another trader shared in the optimism, writing that “[this is a] very strange place to be short on Bitcoin,” pointing towards a chart that indicates BTC is at a level that marked the bottoms of the 2018 and 2019 bear markets.
Assuming the historical precedent holds up, Bitcoin is poised to bounce, from the high-$8,000s.
The Fundamentals Corroborate Bullish Narrative
The fundamentals support an optimistic outlook.
Senior commodity analyst at Bloomberg’s Intelligence unit, Mike McGlone, recently shared that there are “key indicators [that] support Bitcoin’s ability to sustain above $10,000.” They are as follows:
There has been strong growth in the count of active BTC addresses. This normally occurs in bull markets, as new users start to use Bitcoin because of the higher prices. An analysis from McGlone of BTC’s active addresses earlier this month indicated that Bitcoin could be sustainably trading as high as $12,000.
There is now a record amount of open interest in the CME’s Bitcoin futures contracts, likely due to the introduction of Paul Tudor Jones.
Grayscale Investments is currently holding more cryptocurrency than ever before, showing Bitcoin is experiencing Wall Street and institutional adoption.
Photo by Nick Chong on Unsplash
The broader crypto industry is in a broader “crypto spring” too, further support prices. Alexis Ohanian — the co-founder of Reddit and a managing partner at Initialized Capital — said in a recent interview:
“I try not to track prices, I can’t predict any of that stuff. What I can say is we really do see a crypto spring right now in terms of top-tier engineers, product developers, designers, building real solutions on top of the blockchain. And that to me is the most interesting part… We’re seeing really top-tier talent building on the infrastructure.”
Featured Image from Shutterstock
