Since Sunday, the price of bitcoin has declined by almost 16%. However, yesterday the market turned things around, and BTC/USD started to climb back up toward $40,000.
Today, BTC/USD has moved back above $36,600, according to CoinGecko, and we think it will close off the day much above $37,000.
Yesterday, we wrote that we expected the price of bitcoin to keep trading between $35,000 and $39,000, and that’s precisely what has happened. Today will be an important day if bitcoin attempts to break its current resistance sitting close to $40,000. If BTC/USD has another fallback, we will start worrying, but until that scenario plays out, we remain bullish.
Additionally, we notice how BTC/USD is finding a significant number of buyers above $35,000, an important indicator that the upward trend is here to stay.
Today has been an exceptional day for altcoins, mainly ether, which has recently broken its 2017 all-time high and went above $1,240.
As reported by Cointelegraph:
“Ether (ETH) seems to be on a roll by not only holding its own against the U.S. dollar but also consistently floating around the $1,300 threshold, and now ultimately, briefly surpassing the all-time high value of $1,428.”
Just like ether did, we believe bitcoin will surpass its previous high of close to $42,000 soon.
To conclude our introduction, we think that as the price of bitcoin rises, more buyers will enter the space. As we discuss in the next section, bitcoin’s adoption grows as the price rises; in the short-term, we believe once the price of bitcoin surpasses $40,000, more buyers will get involved and push BTC/USD above its record price of $42,000 in a blink of an eye.
For now, we think BTC/USD might have a few extra bounces between $35,000 and $40,000;
however, we’re more confident that either today or tomorrow, bitcoin will surpass the $40,000 mark. Therefore, once the price of bitcoin breaks out of the consolidation zone, we should see a move toward $50,000.
As a reminder, we are confident 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 $35,000.
- BTC/USD daily volume goes back above its 21-day Moving Average.
What Do Traders Think?
The first tweet we’ll discuss comes from Rekt Capital, whose Twitter profile describes him as a cryptocurrency trader and analyst, as well as the author of the Rekt Capital Newsletter, and it shows the reason why we’re so bullish on the short-term price of bitcoin.
In the post, Rekt Capital shares a six-hour chart of the price of bitcoin. As we did early in the week, he adds two trendlines: one for support and the other for resistance. The key takeaway is that bitcoin is now in an uptrend, and the price will soon break its resistance price range around $40,000.
Interestingly, the trader highlights an important trend. He wrote: “Another day, another Higher Low inside what is increasingly looking to be a Bull Flag for Bitcoin.”
Rekt Capital concludes that the current price action is showing signs of being in the early days of a parabolic, upward movement. The analyst also drew a blue trendline that depicts where they think the price is going: up.
Could we see bitcoin breaking a new all-time high soon, just like ether did today? Perhaps Dzhambala, another analyst whose input is on Twitter, can help us answer why the price is moving up.
Dzhambala HODL’s Twitter profile describes him as a bitcoin consultant.
In his post, Dzhambala HODL highlights a key reason for the recent upward price action: companies like Grayscale continue to purchase substantial sums of bitcoin, no matter the price.
As the consultant wrote:
“Actually, it looks like not only did @Grayscale buy 16,000 BTC today, but this was the single largest one day purchase of BTC * IN BTC TERMS * not just dollar terms.”
What this shows is that institutional investors and smart money are interested in acquiring more bitcoin. This factor will most likely continue to push the price up, since most of the bitcoin bought is HODLed. This simply means less and less bitcoin is available at spot exchanges, which will eventually push the price even higher.
The main reason is due to bitcoin’s limited supply. Because the total bitcoin available to be mined has a hardcoded limit, bitcoin behaves much like a Veblen Good, which Investopedia describes as follows:
“A Veblen good is a good for which demand increases as the price increases, because of its exclusive nature and appeal as a status symbol. A Veblen good has an upward-sloping demand curve, which runs counter to the typical downward-sloping curve. However, a Veblen good is generally a high-quality, coveted product, in contrast to a Giffen good, which is an inferior product that does not have easily available substitutes.”
Therefore, as bitcoin becomes increasingly scarce, the more likely it is the price will rise.
The third tweet of the day comes from NebraskanGooner, whose Twitter profile describes him as the founder at LVL and a co-owner of Elevate Trading.
In his post, NebraskanGooner writes that he expects a significant amount of FOMO (Fear Of Missing Out) from retail investors once bitcoin breaks above $40,000.
His analysis matches our prediction that once bitcoin breaks through the current resistance sitting between $40,000 and $42,000, it should be smooth sailing until bitcoin reaches $50,000.
The only thing left is the new buyers who haven’t yet entered the space. This translates into future additional FOMO. If you want more details on why these players are so important for rapid price appreciation, let’s ask Willy Woo to clarify the topic.
Willy Woo, a crypto analyst whose Twitter profile describes him as an on-chain analyst, will provide the last tweet of the day.
In his post, Woo highlights how the Tether FUD (Fear, Uncertainty and Doubt), which mainly translates into this post circulating for the past few days all over social media, is a good thing for the long-term price action.
The analyst highlights how important it is for the market to shake out weak hands that recently bought bitcoin.
Woo concludes by writing that
“This consolidation is SUPER healthy.”
Let’s discuss how we think the price of bitcoin will move tomorrow. Do we think BTC/USD is out of the woodwork just yet? Or will the consolidation ensue for a few more days?
Bitcoin Price Prediction
Over the weekend, bitcoin had a significant fallback of more than 15%, according to CoinGecko.
Since Friday, the price of bitcoin started a new downtrend and is currently trading below $40,000 around $35,000. However, yesterday the trend reversed and BTC/USD moved back closer to $40,000.
At the time of writing, the price of bitcoin is above $36,600.
Adding to the above, we don’t see a reason why bitcoin couldn’t go above $50,000 by the end of this month. As most analysts and traders anticipate, the next run-up could take bitcoin to brand new all-time highs.
Today we discussed how most traders see the price moving in the short-term.
Additionally, we investigated why most think the price is moving up. It seems not only institutional buyers have resumed purchasing large sums of bitcoin, but also FOMO by retail investors is real. Hence, there is a strong chance the price of bitcoin continues its upward trajectory.
How do we think the price will trade today? As shown in the above chart, we think that bitcoin could find a top close to its previous record price, around $42,000, but we highly doubt BTC/USD goes much above this price range.
On the other hand, we don’t expect the digital currency to drop much below $34,000 due to the sheer number of buy orders placed above $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 believe BTC/USD will find a new high near the $50,000 price range until the end of the month.