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Bitcoin has surpassed $40,000 in value, and the cryptocurrency industry is gradually rebounding.
On Wednesday, the price of Bitcoin (BTC) reached $40,000 for the first time in five days, breaching over a critical sell level.
Traders anticipate a further rally and the formation of a positive market structure if Bitcoin continues to soar over $42,000 and Ether (ETH) reclaims $3,000.
$42,000 and $49,000 are key resistance levels
Bitcoin has been regaining ground over the last week as a result of three primary causes.
First, Elon Musk, CEO of Tesla, and Michael Saylor, CEO of MicroStrategy, have been urging Bitcoin miners to utilise greener energy.
Since then, Musk and Saylor have gone even farther, meeting with Bitcoin miners in the United States regarding dependable energy use.
Spoke with North American Bitcoin miners. They committed to publish current & planned renewable usage & to ask miners WW to do so. Potentially promising.
— Elon Musk (@elonmusk) May 24, 2021
Second, the Bitcoin futures market has reset to a large extent. According to data from Bybt.com, when BTC crashed to below $30,000, the futures market open interest dropped from $27 billion to $11 billion.
This suggests that the futures market is not oversaturated, which increases the likelihood of a more sustained and steady gain.
Third, Ether has risen fast in recent days, which supports Bitcoin and altcoins because ETH had a deeper correction than BTC.
The resurgence of major cryptocurrencies as a whole is strengthening attitude surrounding Bitcoin, resulting in a steady recovery of the crypto market.
In the medium term, traders believe that $42,000 is a crucial short-term resistance region, followed by $49,000 as a macro sell region.
A pseudonymous trader known as Pentoshi wrote:
“Many alts coming into some resistances +/- a 5%. We’ve gotten mean reversion as discussed during the nuke. However $BTC has been stuck. It started its LH trend a month ago. Would like to see Bitcoin pop + 42k or alts likely make their own LHs and dip again. Clock is ticking.”
What’s important to observe?
For Bitcoin traders, the two most important things to watch in the near future are exchange outflows and the $42,000 mark.
If the $42,000 mark holds and Bitcoin exchange outflows grow in tandem, it would imply that investor and whale confidence in BTC is increasing over $42,000.
There are fears of a “dead cat bounce,” which is a short-term rebound, but if BTC holds $42,000, the chances of a fakeout rise are greatly reduced.