Bitcoin (BTC) has been hovering between $ 9,800 and $ 10,500 for about a week, after falling slightly from nearly $ 12,100 on September 1. Since BTC struggles to show any particular price movement, traders tend to be cautious.

In the medium to long term, traders expect Bitcoin to rebound and the current phase of consolidation to take a healthy outcome. From July 16 to August 17, Bitcoin rose from $ 9,005 to $ 12,486 on Coinbase, with a pullback undoubtedly necessary to neutralize the futures market.

Most of Bitcoin’s daily volume comes from the futures market. Cryptocurrency futures exchanges use a mechanism called “funding” to balance the bitcoin market. This mechanism requires long-term contract holders to compensate card sellers for a portion of their positions if the market is majority-dominated, and vice versa.

Usually, when Bitcoin’s rally is overextended, it will outpace the futures market and raise funding rates. In the event of withdrawals, financing rates help to stabilize, reducing the likelihood of long-term or short-term stresses.

Explain the short term downtrend of BTC
Speaking to Cointelegraph, Dennis Vinokuroff, Head of Cryptocurrency Research and Institutional Broker BeQuant, and Jay Hirsch, CEO of eToro Brokerage and Brokerage, revealed that Bitcoin’s outlook in the medium term is positive due to many fundamental and technical factors.

After giving up Bitcoin at $ 12,000, analysts attributed BTC’s decline to several factors. As Vinokurov pointed out, “the aggressive deconstruction of the busy situation associated with DeFi’s assets” may have contributed to the decline. However, other factors such as whale earnings, miners selling their hideouts, and the main South Korean stock exchange, Bithumb, has reportedly been attacked by the police, possibly using bitcoin pressure. Hirsch emphasized that lower prices during periods of low volatility can be exacerbated when there are fewer traders in the market:

Mining is moving higher than usual, the value of bitcoins on the exchanges, while wanting to cover their fixed costs, and investors have gotten a lot lower lately (even on a regular summer vacation). Small volumes indicate volatility, and price drops can be more dramatic than normal during heavy trading sessions. ”
Vinokurov said the pullback could be in favor of Bitcoin in the coming months, as the price deviation is not negative if the market calms down as a result. He also indicated that the leverage and speculative flow of traders will be adjusted after the consolidation period:

“Finding and consolidating prices after a strong rally is a sign of a healthy two-way movement in the market. A drop in price is not necessarily a bad thing, as it gives market participants an opportunity to assess the situation and try to adjust the interest in both the debt / speculative flows and those of the owners in the long term . ”
Bitcoin Long Term Outlook
Starting in the fourth quarter of 2020, analysts remain neutral or optimistic about bitcoin price movements, and a combination of technical and fundamental factors could lead to Bitcoin’s sentiment from November to December. Historically, BTC showed strong performance in the last two months of the year. In particular, in December 2017, BTC climbed to an all-time new high.

Potential technical stimuli include the closing of the monthly Bitcoin index above $ 11,600 for the first time since 2017, reaching a resistance level of $ 12,000. 2020.

The main factors that could contribute to Bitcoin’s growth, strengthening infrastructure, rising inflation and near zero interest rates. A lower interest rate environment increases the likelihood of gold and possibly bitcoin, as it may lower the value of the US dollar. Hirsch SA:

“I think this downtrend is short-lived, and there are some positive developments that support the continued rise in BTC, such as the near zero interest rate policy at the Federal Reserve for the foreseeable future.”
He also added that a Bitcoin breakout is possible in the short term if Bitcoin’s perception as a hedge against inflation improves. Over the past month, public corporations and institutional investors have bought bitcoins worth billions of dollars. MicroStrategy, a US listed company, has invested $ 250 million in BTC in capital for the company.

Source: CoinTelegraph