Today, bitcoin's price took another 2% hit; however, we think BTC/USD will soon start its ascension into higher price ranges due to the diminishing selling volume. Bitcoin reached a new all-time high, just below $62,000, but is now trading close to $56,000, according to CoinGecko. At its worst point in the day, bitcoin's price dropped below $54,000, but it quickly recovered.
Nevertheless, bitcoin's price traded within the predicted range (blue) as we anticipated a potential drop below this critical support level. The Volume Profile Visible Range (VPVR) on the left clearly shows massive buying volume until $47,000, which indicates that bitcoin's price won't likely drop below this price range.
This topic is vital since it shows most critics about bitcoin’s high energy consumption fall short.
More, however, the more energy bitcoin consumes, the safer the network is. Without the high energy requirements, it would be much easier to change the protocol rules (i.e. double-spend attack). Investopedia describes double-spend attacks as
“the incidence of an individual spending a balance of that cryptocurrency more than once, effectively creating a disparity between the spending record and the amount of that cryptocurrency available, as well as the way that it is distributed.”
Getting back to the original topic, we think this recent price retrace is a minor blip in the road and a terrific opportunity to accumulate more bitcoin or open new long positions. We hope that by the end of the week, bitcoin will be back above $60,000.
We remain bullish on BTC/USD as long as:
- BTC/USD remains above its 20-day MMA (red), 50-day MMA (green), and 200-day MMA
(blue). - BTC/USD doesn't drop below $52,000.
- BTC/USD daily volume goes above its 21-day Modified Moving Average soon.
Traders’ Food For Thoughts
Today's first tweet comes from CryptoBirb, a well-known trader and Certified Technical Analyst.
In his post, the trader shared Glassnode's "Bitcoin: Net Unrealized Profit/Loss (NUPL)" chart, that according to the on-chain analytics platform
"looks at the difference between Unrealized Profit and Unrealized Loss to determine whether the network as a whole is currently in a state of profit or loss."
CryptoBirb also highlights with a circle a potential fractal between bitcoin's price today and during the summer of 2017.
In a subsequent tweet, he wrote, "$BTC top 90-120k ok?" which shows he expects the next bitcoin to reach around $100,000.
To support his thesis, he shared the NUPL chart that clearly shows bitcoin's price has not entered the "Euphoria - Greed" zone (blue) yet.
Therefore, CryptoBirb thinks the short-term price of bitcoin will grow towards a potential top at $120,000, sometime in the next few months.
In our opinion, we think his analysis is quite solid, and we'll soon explain why. Nevertheless, there's a small probability that bitcoin's price corrects between 20% to 30% once it reaches $100,000 to $120,000, and then picks up the pace again and breaks its previous high. Some analysts, like PlanB, think this current cycle top could be above $200,000.
The following post comes from Kaleo, a cryptocurrency and options trader.
In their post, Kaleo shared a chart of bitcoin’s daily price, and he added two support lines that show a potential price reversal - to the upside.
The trader also wrote that “This is where you giga-long $BTC”, showing he’s confident the short-term bitcoin’s price will soon rally back up.
We also think bitcoin’s touching the trend line drawn by Kaleo and then immediately moving back up shows potential for a sudden price reversal to the upside.
We would start to be concerned if bitcoin broke the trend and moved toward the low $40,000 region.
The following tweet comes from IncomeSharks, a crypto education and market analysis twitter handler.
IncomeSharks shared the 1-day bitcoin’s price chart, and he added an indicator of his making, “Supertrend”, that indicates when might be a great time to buy and sell.
In his analysis, the indicator just flashes green twice in the past few days, meaning it is a great time to accumulate more bitcoin or to open a new long position, perhaps.
As we wrote above, we also think market probabilities favour a sudden upswing in the next few days.
The last post of the day comes from one of our favourite writers in the space, Parker Lewis, who has penned the collection "Gradually, then suddenly," and is the Head of Business Development at Unchained Capital.
Lewis shared an image of bitcoin's code, showing the function (gettxoutsetinfo) one needs to run in the bitcoin client to verify its current total supply.
The author also wrote a snappy comment that
"Bloomberg still can't verify the total supply of dollars. Peter Schiff can't verify the total supply of gold."
We've picked this post because it shows the most essential trait in bitcoin's history, giving us the confidence to believe its future price will most likely continue to increase: bitcoin's limited and public verifiable supply.
The more demand grows, the higher the bitcoin's price, given its supply is restricted by code.
Tomorrow’s Price
At the time of this writing, bitcoin's price is trading close to $56,000, after suffering a massive over 10% drop since Sunday.
However, many analysts believe this downtrend is just a fad, and that bitcoin's price will soon be rallying back up, towards $60,000 and above.
We tend to agree with those analysts, and we also give a higher probability to bitcoin's price quickly recovering and going back above $60,000 in a matter of days. As we wrote above, $55,000 is a critical support level for bitcoin's price, which means that while BTC/USD holds above this price range, there's no indication the long-term uptrend has reversed.
How do we think the price will trade today? As shown in the above chart, we believe that bitcoin could reach its prior high of around $62,000 in the next few days, as long as buyers return to the bitcoin space.
On the other hand, we don't expect the cryptocurrency to drop much below $52,000. If it fails and does not hold above $47,000, a massive drop toward $42,000 could still be in play.
To finalize, the VPVR shows a high number of buy orders between $47,000 and $50,000 and that there are almost no sellers left above $60,000, which means once BTC/USD rallies back up, it should break a new high and continue into price discovery mode.