55 Interactions, 4 Today
Bitcoin made a huge move this week, opening with some decent gains, but it was rejected just above $40,000. Bears began to pull the price down around that resistance, but bulls are still pushing in, with BTC trading at $39.73K at press time, highlighting daily gains of 6.74 percent.
This week got off to an exciting start, with Bitcoin’s price soaring like a rollercoaster, fueled by rumours of Amazon accepting BTC and corresponding denials. Despite the Tether FUD, which was later debunked, and the rekting of leveraged traders, Bitcoin maintained its upward trend.
An explosive move ahead?
In a previous article, we discussed how Bitcoin’s Relative Strength Index, which broke away with a massive uptick from its continued downward trajectory for the first time this year, was a major sign of bullishness for the asset. The Bollinger bands were another strong indicator that pointed to a ‘explosive upward price momentum.’
Trader and analyst, Scott Melker, in a recent video highlighted that around December 2020, Bollinger Bands were tight, then in April 21 bands had constricted again. Interestingly, bands were extremely tight throughout the month; previously, when this occurred in December (2020) and April (2021), it ‘led to a volatile explosive move’ as demonstrated by BTC’s price. Melker went on to say that the recent tightening and opening up of bands was a ‘very bullish thing.’
What about the bearish signs, though?
External news has always been a major driving factor in Bitcoin’s price and sentiment. Generally, when the price rises, so does social sentiment. However, during the Amazon rumour, BTC’s Twitter-weighted sentiment quickly turned positive, only to crash to its lowest levels in 6 months once Amazon denied the rumours. The same was seen for Bitcoin’s total weighted sentiment, which was also seen declining.
That being said, a report pointed out that the predicted funding rate is neutral or negative at the moment, meaning most people are short. Does this mean that the recent Bitcoin price action was not enough to set a reversal?
It is fair to say that in order to see a true reversal, the coin must continue to break the $40k resistance and test the $42K mark, which will help decipher a better long-term picture for the coin. While Twitter sentiment and funding rates indicate that the majority of players remain bearish on Bitcoin, upward price action may change that.