94 Interactions, 6 today
A massive drop, peak fear and anxiety, and a superstar return with a bang pretty much sums up Bitcoin’s price action over the past week. The downward trajectory of the king coin resulted in a market-wide fall and a major bearish market. However, nothing is permanent in the crypto-verse, where volatility reigns supreme. Bitcoin’s dip below $30k didn’t last long, either, and the asset quickly made a strong comeback, gaining 6.25 percent in 24 hours at the time of writing.
A closer look at Bitcoin’s 4-hour charts revealed that the coin not only made decent gains, but it also broke through the $31k support level. Furthermore, an increase in on-balance volume (OBV) accompanied by price gains confirmed a short-term upward trend. On the 4-hour chart, the OBV had reached lows of 1.294M, which were last seen in December 2020.
However, the increase in volume aided the increase in price. Furthermore, trade volumes increased, with the two most recent candles being the tallest green candles of the month.
Analyst and trader Scott Melker in a recent video highlighted Bitcoin’s closed channel downward trajectory. While he thought it was a good opportunity for those who were shorting BTC when it was at $30k, a sustained retest above $31k-$32k on the 4-hour chart would be an interesting scenario. He stated,
“BTC closing at above 30K (towards the end of July 20) is a very interesting scenario. That’s a really bullish signal among all the bearishness.”
The analyst, however, did point out that if BTC fell below the $30k level again, then the next support will be $28,600.
Melker also noted that the majority of external Bitcoin news has been “pretty much bullish,” such as OpenSea raising $100 million and JP Morgan hiring new employees for its growing blockchain business. Another report revealed growing institutional investor interest in cryptocurrency, and Rothschild Investment tripled its Bitcoin exposure amid other bullish signals in the larger Bitcoin bear market.
Aside from price action, certain other indicators also pointed to a recovery for the top cryptocurrency. For example, Bitcoin’s realised profit nearly doubled in a single day. However, Bitcoin’s NVT ratio remained above previous levels, indicating that the asset is in the midst of an unsustainable bubble.
At the time of writing, the NVT ratio had dropped significantly from recent highs. As a result of MVRV falling, BTC was undervalued. MVRV levels this low were last seen in August 2020.
Bitcoin analyst Benjamin Cowen was quick to spot a market trend that could change the game for the top coin, at least in the short term. He presented that the money supply for Bitcoin has been testing its prior all-time-high from 2017. Cowen said,
“When more dollars are in circulation, it certainly can have an impact. When accounting for the money supply, Bitcoin is currently testing the prior all-time-high from 2017. This is actually the first time ever in Bitcoin’s history, that it’s going back and testing the prior all-time high.”
Despite the fact that the money supply has returned to its 2017 levels, Cowen believes that, while there will be more downside and upside volatility, the entire cycle will not fall below 2017’s all-time low and then remain there for two years. According to the analyst, a more likely scenario would be testing of these lower levels, followed by some short-term consolidation and upward movement.
Overall, Bitcoin appeared to be in a bind, and this appears to be one crazy cycle for the king coin. Future price movements would be determined by major indicators such as the money supply and trade volumes. As a result, keeping an eye out for them will be beneficial.