The Bitcoin (BTC) price is showing signs of a new rally, breaking through the $ 40,000 resistance zone. The combination of positive data points in the chain and preferred market structure means that analysts and traders are anticipating Bitcoin’s imminent breakthrough to entirely new heights.
In the short term, the $ 38,000 and $ 40,000 levels remain the biggest hurdles for Bitcoin. The longer BTC breaks through $ 40,000, the more likely it is a correction. Hence, it is imperative that Bitcoin crosses $ 40,000 and remains above that level for the foreseeable future. Bitcoin has already spent nearly three weeks on less than $ 38,000, resulting in a short-term price cycle stagnating and losing momentum. On February 6, Bitcoin finally broke through the $ 38,000 level, making it a support level.
One of the positive things in the data chain that increase the chances of Bitcoin being hacked is the increase in the number of whale addresses. Santiment analysts said bitcoin whales continued to pile up despite rising asset prices: “Bitcoin whales # ($ 1000 + BTC addresses) have not stopped piling up, and middle class traders (10-1000 BTC) have not stopped making money.” Earnings are around $ 38,000. Until then, #FOMO headlines are coming back soon! ”
The accumulation of whales in bitcoin coincides with large inflows from Coinbase, which usually indicates that investors with high net worth are buying bitcoins. “It’s a coincidence that we saw huge amounts of BTC dollars taken out of the coin base. The first market correction for the 2021 bull market has already ended, ”the pseudo trader said on Twitter.
Cryptocurrency trader Scott Melker notes that Bitcoin is showing a favorable technical market structure compared to upbeat data and major factors in the chain. He explained that Bitcoin sees a “mass bullfighting” structure that, when launched, could lead BTC to reach $ 63,000 in the foreseeable future: “$ BTC is likely to interrupt a big bullfight that will technically raise the price to $ 63,000 to be optimistic … about the short term price cycle of bitcoins.
What about bitcoins in the short term?
Speaking to Cointelegraph, Jay Hirsch, CEO of the US social trading platform eToro, said there is a constant flow of capital from bitcoin to decentralized finance and other alternative currencies. The market became full of risks and DeFi-related tokens surged 30-100% in one day. The desire to use altcoins, which are seen as a game with higher returns and higher risk, has slowed the speed of bitcoins.
However, Hersh suggested that Bitcoin is still bullish in the long run. He explained that Bitcoin has been pegged to a specific area for a while, which means it was trading in a narrow area. Hersh said this would change if the price of bitcoin surpassed $ 40,000 because it would lead to increased interest in bitcoin in a short period of time. Based on market data for options, Hersh said there is a large open interest of $ 52,000 and $ 56,000 that Bitcoin could turn to next time around. he added:
I would be surprised if Bitcoin doesn’t surpass $ 40,000 in the next few months. No support levels were identified for this price as it traded there for a very short time. However, placing options can be a good place when you are trying to understand where professional traders see the market move.
Bitcoin stagnated last week as the decentralized finance market surpassed major cryptocurrencies including Bitcoin and Ether (ETH). Hirsch said many investors, including institutions, have seen opportunities for higher paying games in the DeFi market. Consequently, he said that bitcoin profits were redirected to alternative currencies, leading to an “alternate season.” However, in the long term, Hirsch believes that profits are likely to return to Bitcoin, explaining this:
This capital rotation, often referred to as the “alternate season”, is common after Bitcoin reaches new heights and is often accompanied by the sale of these BTC assets. In the short term, this feeling is neutral and can be seen in range-limited bitcoin trading. Long-term sentiment has remained optimistic lately, however, as evidenced by PayPal’s admission during this week’s earnings report that they were surprised by the number of crypto-active transactions on their platform.
Strategists expect a clean $ 40K breakout
Investors, researchers and strategists from Bequant, Lmax Digital, and CrossTower told Cointelegraph that they expect Bitcoin to successfully grow by more than $ 40,000, as well as the huge growth in demand in December 2020.