Bitcoin: sub $40k hit, is the bottom in?
Yesterday, global markets witnessed further selling and so did cryptocurrency markets. Bitcoin hit a low of $39,650 on Coinbase. Yesterday's candle was a nice doji that, given yesterday's volume, could imply that Bitcoin's bottom is in and Bitcoin is supposed to rise from this level. $40k would also have been strong support based on the current uptrend from July 2021. So, is the bottom finally in? Let's revisit some of the stats I shared last week.
Well on the price front we need more high-volume candles that can show that Bitcoin has stabilized at $40k or is rising. The volume for today till now does not exude any confidence. Volume has been rising for a few days now and if that can continue, then one can expect that Bitcoin may be finding its bottom soon. RSI indicates Bitcoin is oversold so one can expect some upside but nothing here indicates that the upside will imply Bitcoin heading to new all-time highs.
Bitcoin Open interest is continuing its decline and was declining up until yesterday. Don't think that with the US Fed's policy overhang, open interest will rise further from here. If anything, unless risk-taking returns to equity markets, I do not think there will be sufficient open interest increase in the futures market. Futures markets are driven more or less by large capital players and institutions.
Funding rates have fallen sharply, so it is getting costly to short Bitcoin. While there is still room for further downside, I think we are very close to a bottom based on this stat. Maybe a few more days of selling pressure and then we will finally see leveraged selling go away from cryptocurrency markets.
It would be nice if $40k can be a local bottom for Bitcoin. I mean a low of $39,650 isn't really sub-$40k. I still think there is room for downside from here. Albeit, limited. The indicators are slowly starting to turn in Bitcoin's favor.
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