Bulls are looking to flip $44,000 for support. Analysts forecast more upside for BTC and call the asset “the Amazonof our time”.
Despite Bitcoin (BTC’s) rejection at $45,500, there is still hope for a significant rally in cryptocurrency markets. Bulls are currently looking to strengthen their defense at $43,000.
Cointelegraph Markets Pro and TradingView data show that bears made a run for $45,500 on Tuesday and then dropped the price to $42,900 in afternoon trading. Investors realized their profits and prepared to place bids of around $38,000.
Here are some insights from analysts about what triggered the rally in Bitcoin price over the past week. Also, what levels should you be paying attention to moving forward.
Is it a legitimate breakout?
Many traders were caught off guard by the sudden rise higher. Although headlines in the crypto space predicted an extended bear market, such dire warnings could have been prematurely based on recent data from Glassnode. According to the blockchain analysis firm, “Prices have bounced off a variety of fundamental levels that have historically indicated undervaluation or a fair value price.”
Glassnode analyzed the data on liquidations on futures exchanges and concluded that although the Long Liquidation dominance charts “show that shorts were on the back-foot this Week, with a minor tilt towards short side liquidations,” it was unlikely that price upside is driven primarily by a short squeeze.
Glassnode pointed out that in previous price drops, futures open interest (OI), saw large drawdowns or “deleveraging events”, as evidenced by the large red spikes at the graph. This feature is absent from the current price drop.
Glassnode stated,
“This may indicate the probability of a short squeeze is lower than first estimated, or that such an event remains possible should the market continue higher, reaching clusters of short seller stop-loss/liquidation levels.”
“We are still in a traders market”
David Lifchitz (managing partner, chief investment officer at ExoAlpha), addressed the forces that impact Bitcoin’s price. He highlighted the recent correlation between BTC-stocks and BTC-stocks, and asked what it would take for Bitcoin to regain its destiny.
Lifchitz says that stocks are still in “la-la” land, whereas bonds are “more in reality.” This helps to give a better picture of the strength and stability of global financial markets. It is based on the fact “bonds tend not to be as successful as stocks,” while bonds are currently struggling.
Lifchitz provided reassuring words to bulls concerned about the large head-and-shoulders pattern on the BTC chart. He stated that it was “invalidated” by the recent rise in BTC prices.
Lifchitz outlined the near-term Bitcoin targets at $48,000, $51,000, and $53,000, but cautioned that there may be a pullback to the high $30,000s before reaching $53,000.
Lifchitz said,
“In the meantime we’re still a traders market with opportunities to grab some points here and there between soft targets: profits must be quickly taken off of the table on every small pullback. Rinse, repeat. It’s difficult to see Bitcoin moving higher without a macro catalyst.
Related: DoJ seizes $3.6B worth of crypto and makes two arrests in connection to 2016 Bitfinex hack
Bitcoin is the “Amazon of our times”
Analysts at Macro Hive provided a final insight into Bitcoin’s price action in relation to Amazon stock price growth. They are a financial market research organization that considers Bitcoin “the Amazon of our times.”
Macro Hive pointed out that even Amazon experienced large drawdowns over the years. They suggested that your exposure to Bitcoin should be appropriate sized to ensure that you can withstand 50% to 80% of these drawdowns.
MacroHive stated,
“But major drawdowns can also be good entry points for exposure. We are closer to this point according to our metrics, so we would consider building exposure. We wouldn’t stay too long in an environment with rising central bank rates, falling global growth momentum and rising interest rates.
The total cryptocurrency market is now worth $1.949 trillion, and Bitcoin’s dominance rate at 41.7%.
These views and opinions are the author’s and do not necessarily reflect those of Cointelegraph.com. You should do your research before making any investment or trading decision.
