During the weekend, the price of bitcoin enjoyed a substantial rally, as a significant number of buyers entered the market on Friday and pushed the price back above $33,000. On Saturday, the trend continued, and for a brief moment, BTC/USD went above $38,000.
In the span of two days, the price of bitcoin grew nearly 30%. Impressive.
Nevertheless, Sunday, the price started to consolidate, and today we’ve noticed a minor decline of around 3%.
The unexpected price swing was attributed, by some, to the actions of Elon Musk. According to CoinDesk:
“While the exact reason for the bullish move is hard to define, prices surged after Tesla and SpaceX CEO Elon Musk changed his Twitter bio to mention the cryptocurrency. While the bitcoin community is keen for Musk to come out as a supporter, he seemingly enjoys dropping crypto mentions as something of a tease.”
At the time of this writing, bitcoin was trading around $32,700, according to CoinGecko.
Additionally, we argue that there is significant support between the current price and $30,000 where the 20-day Exponential Moving Average (EMA) sits.
Regarding our prediction for the weekend, BTC/USD traded within the blue range; a little wick crossed our predicted top, but this ceased to matter as the price closed inside the range.
Additionally, BTC/USD surpassed $33,000, just like we forecasted, even though it is once more struggling to move above this critical level.
For now, we expect bitcoin to continue its uptrend and soon move toward$35,000. We are
confident that current negative investor sentiment around Wall Street will continue to attract new buyers into the bitcoin space.
Hence, we argue the short-term price action of bitcoin much depends on retail adoption.
For now, we think BTC/USD might experience a few extra bounces between $30,000 and $35,000 before starting to rally toward $40,000, sometime this week or the following. Once the price breaks its previous high, we should see a rapid move toward $50,000.
As a reminder, we are confident that BTC/USD will continue to move upward if:
- BTC/USD remains above its 20-day EMA (red), 50-day EMA (green) and 200-day EMA
(blue). - BTC/USD doesn’t drop below $30,000.
- BTC/USD daily volume goes back above its 21-day Moving Average.
What Do Traders Think?
The first tweet of the day comes from Alex Kruger, an economist and trader with more than 60,000 Twitter followers.
Kruger shares his views on the most important market participants currently involved in bitcoin.
He identifies seven kinds of key players, which include:
“Institutional macro: long BTC or considering it, VCs: gobbling up DeFi, Bitcoin hodlers: stacking sats, Crypto natives: all over the place, New retail: buying anything they hear about, WSB: concentrated pumps, and Asian whales: selling.”
While we agree with most of what Kruger wrote, we still need to highlight that not all institutions are long on bitcoin. For instance, many hedge funds are short on the future price of bitcoin.
According to the “Net Positions of CME Bitcoin Futures by Trader Category” chart, courtesy of the Block, it seems that hedge funds have a net short position, which currently wagers close to $750 million that the price of bitcoin will drop.
Not only that, but it seems that as the price of bitcoin rises, the more money hedge funds put into short positions. Conversely, the other trader categories are putting more money into long positions, which means they think the price of bitcoin will move up.
Who is right, and who is wrong? In our opinion, we believe the price of bitcoin will continue to move to higher price ranges. However, we also think bitcoin's price is quite volatile, which means that we may see a significant drop before bitcoin moves back above its all-time high around $42,200.
The next comes from CryptoBull, a bitcoin trader with nearly 170,000 followers on Twitter.
In his post, CryptoBull shares a 4-hour chart of BTC/USD, adding two trend lines, one showing resistance at the top, and another support at the bottom.
The trader draws a green trend line showing where he thinks the price of bitcoin will move toward the $50,000 range.
Since BTC/USD broke up the resistance zone, most traders are bullish on a continuation of the uprise that was kick-started by Musk recently adding #bitcoin to his Twitter bio.
Will the price of bitcoin continue to move up, or is the current uptrend just a fad?
The third post of the day comes from Rekt Capital, whose Twitter profile describes him as both a cryptocurrency trader and analyst, as well as the author of the Rekt Capital Newsletter. The post shows the reason why we’re so bullish on the short-term price of bitcoin.
This post builds on CryptoBull’s tweet, and it shows two charts for the price of bitcoin. While the first is a 12-month chart, the second is a one-day chart.
Essentially, CryptoBull highlights how bitcoin's price seems to move in four-year cycles and how the price is right now entering a new phase. As the trader writes,
“Last time #BTC started a new 4-Year Cycle? 2017.”
To conclude, CryptoBull shows in the second chart how each quarter BTC/USD has a growth period followed by a small consolidation. The cycle repeats until the price reaches lofty valuations, causing a significant drop from which bitcoin prices cannot recover.
The last tweet of the day comes from Michael van de Poppe, whose Twitter profile describes him as a full-time trader and technical analyst.
In his post, van de Poppe makes a few predictions for the current bull cycle. And we couldn’t be more excited to share them with you since they are highly bullish.
The trader writes that he expects bitcoin to find a top between $350,000 and $450,000, meaning that the total bitcoin market cap could reach north of $8 trillion.
Not only that, but van de Poppe also predicts ether will trade between $10,000 and $17,500 during the current bull cycle.
If the trader’s guesses are correct, there’s plenty of room for the entire cryptocurrency market to grow. Hence, we believe that focusing on accumulating during downtrends is the key to success.
Bitcoin Price Prediction
Today, bitcoin's price had a minor downfall, and BTC/USD went, yet again, below $34,500, according to CoinGecko. Nevertheless, during the weekend, the digital currency’s price rose by double digits, which clearly shows that new buyers are entering the space.
Additionally, bitcoin remained within our predicted range. At the time of this writing, bitcoin was trading at $32,700.
Regarding the medium- to long-term price action of bitcoin, we think the odds favor a
continuation of the bull run. As we have written countless times, as long as “smart money” investors keep increasing their bitcoin holdings, we are hopeful we will see steady growth in the price of bitcoin.
Adding to the above, we discussed what traders think about the most recent price action and how the price will move until the end of the bull cycle. Both outlooks appear extremely bullish, which leads us to think there will be another significant price swing, sooner than later.
How do we think the price will trade today during the first day of February? As shown in the above chart, we believe that bitcoin could find a top close to $38,000, but we highly doubt BTC/USD goes above $40,000. There are still many sellers around $35,000, meaning the price should find it difficult to move over this critical price range.
On the other hand, we don't expect the digital currency to drop much below $31,000 due to the sheer number of buy orders placed around $30,000.
To finalize, the Volume Profile Visible Range (VPVR) shows a high number of buy orders between $31,000 and $37,000, and then again between $27,000 and $29,000, which means BTC/USD should not go below $30,000, even if things deteriorate significantly.
As a reminder, we think it's still possible that BTC/USD will attain a brand-new record price around $50,000 before February comes to an end. For now, we remain bullish on the long-term price action, as long as the price holds above the 20-day EMA and a significant number of new buyers keeps entering the bitcoin space.
Be careful with the market until BTC/USD closes above $35,000 as there's plenty of room for a choppy week. While volume is low, there is a chance that volatility increases, which could trigger sharp moves to the upside or downside.
We also notice the price keeps putting in higher lows, which is a sign of recovery.