Bitcoin Analysis for 02/03/2021

Yesterday, bitcoin had an impressive rally. In the past 24 hours, bitcoin grew over 12%, and it was trading back above $45,000, at around $48,200 at the time of this writing, according to CoinGecko.

If the price trend continues to move up, we think BTC/USD is now starting a brand new bull-run, hopefully towards $60,000 and above. However, until bitcoin's price breaks the critical $50,000 range, and finds support above, we think it's not out of the woods yet.

Adding to the above, we think the main reason for the recent pump in BTC/USD is that a horde of new buyers arrived at the market.

According to Bloomberg's Lynn Thomasson,

"Bitcoin rallied after a volatile weekend session, riding a broad resurgence in risk assets and a bullish report from Citigroup Inc."

As we discuss later in the "What Traders Are Saying" section, it seems that a comprehensive report by Citigroup was released that stated that bitcoin could become "the currency of choice for international trade". Could bitcoin become a mainstream digital asset that a significant part of the world population aspires to hold? We think so too.

Coming back to the chart above, we also noticed that BTC/USD did not reach the predicted bottom and started a new leg up without touching the 20-day MMA (Modified Moving Average).

To conclude, bitcoin's price broke through the top of the predicted range, and if it finds support above $50,000, we think there's a high chance BTC/USD will continue to move up.

As a reminder, we are confident that BTC/USD will reverse its downtrend soon and the long-term uptrend to resume right after. 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 $45,000.
• BTC/USD daily volume goes above its 21-day Moving Average soon.

What Do Traders Think?

This week's first tweet comes from Willy Woo, @woonomic, a crypto analyst whose Twitter profile describes him as "pioneering on-chain analysis."

In his post, Woo shares an extremely relevant chart of the "Bitcoin Velocity vs US Money Stock".

What's astonishing is bitcoin's surge in terms of medium-of-exchange. As Woo points out:

"BTC is moving more than the money we have for spending."

If we look at the chart, we can see that bitcoin (blue) is currently changing hands faster than the USD M1 Stock (black). Why is this surprising? Well, since most analysts classify bitcoin as a store-of-value, we would expect bitcoin to remain dormant and to exchange hands much, much less than currency, in this specific case, the U.S. dollar.

We're quite surprised about this statistic, and we hope bitcoin continues to surge as a medium-of-exchange, as that helps with bitcoin's distribution.

The more bitcoin exchanges hands, the more likely it will become a global medium-of-exchange.

The next post comes from Carl Quintanilla, a principal anchor at CNBC.

In his post, Quintanilla shares a vital report by Citi Bank that, as the author wrote,

“which concludes the cryptocurrency is at a tipping point and we could be at the start of massive transformation of cryptocurrency into the mainstream.”

This is fantastic news given the fact that, according to ADV RATINGS, Citi is a major bank in the United States with $19 trillion AUM.

If banks and other financial institutions enter the bitcoin market in full force, we expect a significant rise in bitcoin’s medium to long-term.

The next tweet comes from Michael Saylor, the founder, chairman, and CEO of MicroStrategy.

Saylor shared that MicroStrategy has just finished acquiring an additional 328 bitcoin at an average price of $45,710. In total, that’s around $15,000,000 spent to purchase bitcoin.

We think this news is so bullish since it shows corporations keep betting on bitcoin, even though the market just went through a significant 20% correction.

Not only that, but we argue that these players are not looking to sell in the short-term, which means that if demand for bitcoin stays the same, the price is likely to increase given the supply shock the market is experiencing.

In sum, the more bitcoin is hodled, the less likely it is the price to fall rapidly.

The last post of the day comes from Luke Martin, a trader.

Martin shares an exciting chart of bitcoin's price in his tweet since late 2020, and he added a few boxes showing MicroStrategy's bitcoin main purchases.

Adding to that, Martin adds a brilliant conclusion that Michael Saylor is "not trying to time the bottom. He just wants to get long."

Essentially, what Martin means is that it seems MicroStrategy is not trying to time the bottom but, instead, is thoroughly enjoying every dip to accumulate more. That's precisely the strategy we think works the best for long-term hodlers.

Bitcoin Price Prediction

Today, bitcoin's price had a magnificent rebound and is back above $48,000, recovering north of 12% in the past 24 hours. At the time of this writing, BTC/USD was trading close to $48,300.

While we expected another significant drop today, bitcoin's price surprised us and started a new bull-run. We hope it goes far above $50,000 before BTC/USD has another 20% to 30% correction.

Bitcoin broke above the predicted range (blue) as new buyers entered the space. As we have written before, as long as institutional buyers keep accumulating bitcoin, there is little chance the long-term uptrend reverses.

How do we think the price will trade today? As shown in the above chart, we believe that bitcoin could top around $53,000 if new buyers enter the space. However, we think at that price range, new sellers will enter the space, so we think bitcoin may need to consolidate below $55,000, before making a run at $60,000.

On the other hand, we don't expect the cryptocurrency to drop much below $45,000, due to the sheer number of buy orders located around this price region. Also, we doubt bitcoin moves below its 20-day Modified Moving Average (MMA).

To finalize, the Volume Profile Visible Range (VPVR) shows a high number of buy orders between $45,000 and $50,000, and then again at $41,000, which means BTC/USD should not go below $40,000, even if things go south.

As a reminder, we believe BTC/USD will most likely return to its uptrend in less than a week.

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