Bitcoin Analysis for 04/03/2021

Today, bitcoin continued its impressive rally as we've hoped, rising back above $50,000. In the past 24 hours, bitcoin grew over 7% and was trading around $51,200 at the time of this writing, according to CoinGecko.

Like we wrote yesterday, we are now extremely bullish on bitcoin's short-term price since the cryptocurrency closed the day above $50,000.

If the price trend continues to move up, we think BTC/USD may have started a brand new rally, hopefully toward $60,000 and higher. There is a slight chance there is a reversal; however, the higher the price goes, the less likely it is to fall back down.

Adding to that, looking at the Volume Profile Visible Range (VPVR) on the left of the chart, we think bitcoin's price may have found strong support above $50,000. Let's see how the day progresses.

In terms of news, today, most headlines focused on bitcoin's price surpassing $50,000.

To conclude this introduction, bitcoin's price traded within the predicted range (blue), and it found strong support above $50,000; hence BTC/USD will continue to move up.

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 $50,000.
• BTC/USD daily volume goes above its 21-day Moving Average soon.

What Do Traders Think?

This week's first tweet comes from Ki Young Ju, CEO of Crypto Quant and on-chain analyst.

In his post, Young shares the "BTC: Coinbase Pro Outflow" chart. He also highlighted a green zone that refers to "Institutional Buying Level" around $48,000. What's quite interesting to look at are the high outflow volumes at $48,9000, $48,100 and $48,600. Additionally, we notice how bitcoin's price has come out of this buying range and is now back above $50,000.

Ju wrote that

"They are making a lot of bear traps lately, but the price seems to recover the institutional buying level, 48k."

Does it mean that bitcoin's price won't go back below $50,000? We think that until the daily candle closes above this critical price range, there's a strong chance BTC/USD drops below $50,000 and perhaps even moves towards $45,000.

However, at the same time, the less bitcoin is available at exchanges, like Coinbase, the more likely is the bitcoin's price to rise.

The next post comes from LilMoonLambo, a cryptocurrency trader with nearly 80,000 Twitter followers.

In his post, he wrote that

“The fact that $BTC is consolidating at $50,000 tells me we have a lot more upside ahead of us”.

Virtually, this post complements Ju’s.

Like we wrote above, while institutional buyers and retail investors are coming into the bitcoin market, we don’t think the bitcoin price will drop below $50,000.

Therefore, the upside can still grow significantly. In sum, if bitcoin finds support above $50,000, we think $60,000 is in range for the next few weeks.

The next tweet comes from Joseph Young, whose Twitter profile describes him as an analyst and investor with more than 126,000 Twitter followers.

In his post, Young builds on the narrative we've been discussing, and he adds a few twists that paint the complete picture of why we don't think the price will drop below $50,000 anytime soon.

Young wrote that the main difference between bitcoin hitting $50,000 in early February, and achieving this price range now, is that

"This time it's at $50k with default funding, no overcrowded futures market, spot market parity with futures, and high Coinbase premium, coupled with large outflows and institutional interest."

In sum, Young also seems to believe that this time is different. Could bitcoin's price finally find support above $50,000? Perhaps Woo might help us close off the deal.

The last post of the day comes from Willy Woo, a crypto analyst whose Twitter profile describes him as “pioneering on-chain analysis.

In his tweet, Woo puts the last nail in the coffin of whether bitcoin is likely to drop below $50,000.

He shared a chart of the “Bitcoin Entities Net Growth”. The analyst also wrote that

“The increase in Bitcoin users visible on its blockchain per day.”

Essentially, the data provided by Glassnode is exceptionally bullish and points to a continuation of the price uptrend. He thinks that the more users adopt bitcoin, the more likely it is the price to rise. As we’ve discussed in prior editions of the “Daily Roundup”, bitcoin behaves like a Veblen good, meaning that the higher the price, the stronger the demand for bitcoin. According to Investopedia:

“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.”

Woo concluded that

“Like prior cycles, I expect this peak to top out higher than the ones before it. It gives you an idea of how this bull market is just warming up.”

Hence, you should still expect a massive rise in bitcoin’s price shortly, assuming demand continues to grow.

Bitcoin Price Prediction

Today, bitcoin's price continued to grow and finally found support above $50,000. At the time of this writing, BTC/USD was trading close to $51,100.

Therefore, we think the consolidation period has ended, and the correction came to its conclusion. We hope BTC/USD goes far above $60,000 before BTC/USD has another 20% to 30% correction.

One of the reasons for this strong belief is the high number of institutional investors entering the bitcoin game. Additionally, as we discussed above, retail adoption is far from reaching its peak.

How do we think the price will trade today? As shown in the above chart, we believe that bitcoin could top around $55,000 if new buyers enter the space. There's a little chance for a tiny correction when bitcoin reaches this price range; however, it should pick up its uptrend in no time.

On the other hand, we don't expect the cryptocurrency to drop much below $48,500 due to the sheer number of buy orders located around this price region.

To finalize, the Volume Profile Visible Range (VPVR) shows a high number of buy orders between $47,000 and $48,000, which means BTC/USD should not go much below this range even if the trend suddenly reverses - something we don't think will happen anytime soon.

For now, enjoy the uptrend.

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