Bitcoin (BTC) hit a brand new high on February 11th, surpassing $ 48,500 on major exchanges. Since then, the dominant cryptocurrency has solidified, showing no real momentum to break its all-time high in the near future. But analysts were not overwhelmed by the merger after a fresh breakout peak.
Market commentators usually say that when an asset moves slowly or consolidates after an explosive bullish move, it is a sign of a healthy market. For Bitcoin, stability after a strong rally to a full-time high is crucial at this point due to the crowded futures market. If the bitcoin price continues to rally without a proper reset to pull, it increases the possibility of dangerous long-term pressure in the short term.
Prolonged pressure occurs in the futures market when the market is crowded with buyers or long contracts, and as a result the funding rate becomes very positive. When the financing rate is above 0%, buyers must pay a portion of the deal as a reward to their short partner every eight hours. This mechanism is used in futures exchanges to balance the market so that the market is not tilted in one direction for a long time.
Given the negative impact of imbalances in the futures market and the fact that the funding rate for Bitcoin futures constantly fluctuates above 0.1%, which is 10 times the usual rate of 0.01%, a longer consolidation is considered optimistic for Bitcoin. But this is provided BTC remains above the critical support areas, which appear to be set at $ 44,214, and act as an important short-term support level for the whale group.
Where is Bitcoin Going?
In an interview with Cointelegraph, US eToro CEO Jay Hirsch confirmed that Tesla’s $ 1.5 billion purchase of BTC had attracted the market. The news sparked a huge shift in sentiment, leading many investors to perceive this as a turning point in the history of the cryptocurrency market and how public companies will perceive cryptocurrencies. The news also came when MicroStrategy held a workshop with over 1,400 companies to discuss Bitcoin.
Hirsch explained that the synergy between Tesla’s buying of bitcoin and MicroStrategy, which continue to spread awareness of BTC’s profits as a store of value and corporate investments, will encourage more public companies to follow similar announcements. Should this trend occur, Hersh assured that it could be raised to $ 50,000 by the end of the second quarter, adding:
“We are likely to look back at MicroStrategy and Tesla as being at the forefront of this new way of using corporate equity to evaluate cash, rather than just that, and see this as a turning point not only in Bitcoin’s history,” as well as in how the listed companies operate and earn in favor. Its shareholders. ”
Traders also tend to be optimistic about the bitcoin price in the short and medium term. The trader with a pseudonym Loma said that “the relative decline in BTC is very small” at the moment, given the strong market trend around it. The trader noted that “$ 50,000 is inevitable,” and whether BTC drops “in advance” is not a big problem.
A black swan event could theoretically trigger a 30-40% correction in Bitcoin’s price, as seen during recent bulls. However, Bitcoin is seeing unprecedented levels of purchase demand from wealthy investors and institutions that have not been active in recent years.
The influx of new institutional investors is a major variable that could support BTC’s advance in the $ 50,000 to $ 70,000 range. The continuous increase in liquidity in the traditional financial market increases the appetite for inflation hedge funds, including bitcoin and gold.
Possible bearish case for Bitcoin
A crypto whale known as Varo said there is one scenario where Bitcoin could experience a potential setback in the short term. The trader clarified that if BTC struggles to exit $ 48,000, momentum may dampen, with a 5-15% drop in the foreseeable future.
According to him, this would be a positive trend for BTC, as it would allow him access to some liquidity and large orders in the low $ 40,000 range: “I was one of the first to order 52k for one about a week ago and now he is. While bitcoin is having problems with this resistance: it’s not a bear, it just needs more fuel, that’s it.