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Bitcoin broke $40,000 in a powerful recovery rally over the last three days as BTC could stabilise above the main level in the near future.
Bitcoin’s price (BTC) broke through $40,000 on Feb. 6 for the first time in 23 days. But this time, investor sentiment is much calmer with a less overheated derivatives market.
The combination of a less crowded Bitcoin futures market, peaking whaling sales pressure, and rapid recovery could help BTC stabilise more than $40,000 this time.
Bitcoin recovers quickly after whales finish selling
On January 29, a pseudonymous Bitcoin researcher and analyst known as “Material Scientist” said that the order flow of “mega whale” had reached an all-time high.
This means that the selling pressure from whales coping with $1 million to $10 million in orders has reached a record high. At the time, the analyst said:
“Whales bought back almost everything they had sold since $40k, and mega-whales are about to make a new ATH on their orderflow. Downtrend is over, IMO. New ATH soon, don’t miss it!”
If the price of Bitcoin were to set $40,000 as a new support area, it would set a very positive short-term price pattern for BTC.
It would mean that BTC could now rally to its all-time high without massive sales pressure from big whales and high-net-value investors.
In the near term, in order for Bitcoin to retain its bullish structure, it will need to defend two primary support levels: $40,000 and $37,834.
Meanwhile, according to analysts at Whalemap, a data analytics tool that monitors whale data, there is a confluence of $37,834 and $36,290 in whale funding.
If Bitcoin breaks down from $40,000, these two support areas would be critical to defend. Below these two levels would likely result in a short-term bearish trend. The analysts wrote:
“Confluence of whale supports at $37834 –> $36290. A new cluster formed yesterday in that area too. This should give BTC a nice base to take off from if we ever get there. Otherwise $39843 should provide some help too.”
What comes next?
In the near future, some traders expect that Bitcoin will climb above $60,000 with the momentum of the current rally.
Scott Melker, a cryptocurrency trader, said there will be risks, but Bitcoin is expected to hit $63,000 after the breakout.
“There will be pullbacks, maybe even to retest the top of the flag as support. But technically this is a confirmed breakout that should take $BTC to 63K eventually. Disclaimer – patterns rarely reach their targets, but the rules are the rules.”
Bitcoin technically broke out of the bull’s flag when it exceeded $38,000 on Feb. 4. Considering that Bitcoin looks better than the last time it broke $40,000 a month ago, there’s enough momentum to push it past $50,000 this time around.
In the near future, Guggenheim could theoretically confirm its investment in Bitcoin after winning the right to invest in the Grayscale Bitcoin Trust in February.