Bitcoin Analysis for 05/03/2021
Today, bitcoin experienced a slight pause in its uptrend. However, in the past 24 hours, it still gained north of 2%. At the time of this writing, it was trading around $47,900, according to CoinGecko.
As we wrote yesterday, we will remain bullish until bitcoin's price fully reverses and closes the day below $48,000. In case that happens, we think a downward move towards $43,000 would most likely be in play.
On the other hand, if the price trend continues to be bullish, we will interpret this as meaning that BTC/USD has started a new rally that will take the cryptocurrency above $55,000.
In terms of technical analysis, the price is holding quite well above the 20-day Modified Moving Average (MMA). Looking at the left side of the Volume Profile Visible Range (VPVR), we think bitcoin's price may have found strong support above $47,000.
However, let's see how the day progresses.
Kiana Danial, a technical analyst who is the CEO of Invest Diva, recently pointed out some key technical levels, stating that
“The key Fibonacci retracement levels tracing the uptrend that started in January 2021 and ended in February, are set at $47,174, $44K, $40K and $35,754 respectively,”
according to a Forbes article written by Charles Bovaird.
“Due to Bitcoin's volatile nature, there's a possibility that we see a break above the all-time-highs and a visit to a new high at $67,810 before another pullback,” she concluded.
To finish the introduction, bitcoin's price traded within the predicted range (blue), and found strong support above $47,000.
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 $47,000.
- BTC/USD daily volume goes above its 21-day Moving Average soon.
What Do Traders Think?
Today’s first tweet comes from Bitcoin Jack, whose Twitter describes him as a “Trader & Market Analyst.”
In his post, Bitcoin Jack shares the “Bitcoin Fair Price Velocity” chart that indicates
“diminishing velocity/returns per cycle confirmed by a well-defined trendline on log scale, for bitcoin.”
Could this chart be pointing to an extremely bearish scenario for bitcoin’s price in the short term?
Interestingly, the trader adds that
“However, traditional cycle top signals are not flashing yet.” “Any continuation higher breaks the diminishing returns trend this cycle.”
Hence, he thinks that this time, there is a chance the price of bitcoin will break the trendline, which makes sense since “past price history does not predict future performance.”
The next post comes from Sven Henrich, founder of NorthmanTrader.
In his post, Henrich shares a chart showing the bitcoin price (red) and the S&P 500 Large Cap Index (blue). The data indicates that over the last few months, the price of bitcoin seems to have followed the S&P 500 Large Cap Index.
If the correlation remains, what does that mean for the price of bitcoin?
We think that while monetary expansion measures, such as quantitative easing, are being put in place by governments worldwide, namely the U.S., the price of assets will likely continue to grow.
Hence, we think this may benefit bitcoin in the short term, we fear a significant fall when “funny money” stops being injected into the economy.
The next tweet comes from Lex Moskovski, whose Twitter describes him as the CEO/CIO at Moskovski Capital.
In his post, Moskovski shares a chart of the "Bitcoin Illiquid Supply.” The data shows something rather spectacular. The total number of bitcoin not available at exchanges has been rising since the late January rally.
In December, Glassnode released a report stating that
"78% of the bitcoin supply is not liquid.”
This is hugely positive for bitcoin's price, because the fewer coins are available, the more likely it is that the price of each coin will rise.
As Moskovski concludes,
"Strong holders are ramping up their positions despite the sell-off. Bitcoin is holding up against the macro spectacularly well."
The last post of the day comes from Rekt Capital, whose Twitter profile describes him as a cryptocurrency trader and analyst and the author of the Rekt Capital Newsletter.
Rekt Capital shares a few words of wisdom in his tweet we think every investor and trader should carefully read.
He underlines the importance of not being controlled by one’s emotions. He states that
“Panicking about money you’ve exposed to risk either means you took too much risk on” “or you underestimated how this risk will impact you emotionally.”
As we continuously warn investors and traders, especially newcomers, do not invest what you cannot afford to lose.
Bitcoin Price Prediction
Today, bitcoin's price moved below $50,000, a bearish sign, linked to sellers taking control of the market for the day. At the time of this writing, BTC/USD was trading close to $48,000.
Until bitcoin's price remains above $47,000, we believe the correction has concluded and this is just a blip in the road. Hence, the road to $55,000 could be already in front of us.
One of the reasons for this strong belief is the high number of institutional investors purchasing bitcoin. As discussed in the previous section, as time progresses, a growing portion of the total bitcoin supply becomes illiquid. We view this as a key ingredient for bitcoin's recent price appreciation.
How do we think the price will trade tomorrow and during the weekend? As shown in the above chart, we believe that bitcoin could top around $55,000 if new buyers enter the space. There's a slight chance this minor correction persists if the price closes below $48,000.
On the other hand, we don't expect the cryptocurrency to drop much below $44,500 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.
Enjoy these corrections, as they can be a great way to accumulate more bitcoin.
Posted Using LeoFinance Beta
