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Bitcoin’s rise above $32,000 has boosted the mood of traders who believe the bottom has been reached, but some analysts warn that heavy resistance stands in the way of new highs.
Traders are expressing renewed optimism after Bitcoin (BTC) prices remained in the $32,000 range for what could be the second day in a row.
Data from TradingView shows that bulls have managed to regroup at the $32,000 level where Bitcoin has hovered throughout the day but traders a patiently waiting for further confirmation that Bitcoin may be in the midst of a trend reversal before fully re-entering the market.
Here’s what analysts and investors expect next from Bitcoin price.
CME futures see a bullish surge
According to a recent Delphi Digital report, an aggressive reversal in the CME futures basis was observed on July 21, which is a bullish sign for BTC traders who purchased ‘cheap’ futures contracts. The resulting contango is interpreted as bullish because the futures price is higher than the asset’s spot price.
The open interest for CME’s Bitcoin futures doubled from $1.25 billion on July 19 to $2.5 billion on July 20 after institutions positioned themselves “slightly nett long after an extended period of being short,” as shown in the chart above.
While leveraged funds remain nett shot because they use CME futures to hedge their spot exposure, Delphi Digital stated that they have likely “closed out some of their positions.”
According to Delphi Digital:
“Overall, CME’s fresh futures contract creation is a slightly bullish narrative, considering BTC had a mini pump to reclaim its range a few hours after the New York session ended. As noted above, futures basis on CME hit negative levels yesterday before posting a sizeable reversal. All the data points to people buying up futures contracts as BTC spiked below the price range it’s sat in for months now.”
Multiple zones of resistance remain in Bitcoin’s path
Bitcoin’s recovery above $32,000 has reignited bullish optimism among many traders, but the road ahead is far from easy due to the numerous zones of resistance that lie overhead.
According to Rekt Capital, a pseudonymous crypto Twitter analyst, many of Bitcoin’s previous support levels, including $35,000 and $37,000, may soon become resistance.
At the time of writing, Bitcoin is attempting a sustained breakout above $32,200, where it has been stuck for the majority of the day.
Historically, exchange inflows have peaked near market bottoms.
Another sign of optimism came from Twitter user IzzyEibani, who highlighted the recent spike in exchange inflows as a possible sign that the bottom has been reached.
A closer look at the chart reveals that there have been three previous occasions, on August 1, 2017, November 30, 2018, and March 12, 2020, when inflows to exchanges spiked in a manner similar to what was seen on July 16. Following the inflows, the market bottomed each time in a short period of time.
If the market unfolds in a similar fashion to the historical pattern, there is a strong possibility that the recent drop to $29,500 may have been the bottom.