Bitcoin Is Shaky But Medium-Term Bull Case Intact: On-Chain Analyst

Bitcoin is one of the most known virtual currencies which has gained worldwide publicity. The users or traders of this currency always note that the rate is going up with every passing day. This also has attracted the attention of analysts, and they are also quite bullish about the future rate of this currency.  One such view has been in trend in the past some days where it is said by an expert that the price of this currency will remain intact in medium-term also which is indeed good news for the virtual currency lovers.

The Bitcoin price is seeing some downside in recent weeks, but analysts are hoping that it will turn around in the near term. Willy Woo, On-chain analyst, says that the mid-term outlook of Bitcoin is bullish even as the price has remained below $10000 for three days consecutively.

The trend for the short term for BTC looks weak as the price slipped from $11462 to about $10000 in a matter of five days. The 12.6% drop was a huge one, and many investors were not anticipating this much volatility in BTC considering its performance in the last few months. Gold has also lost momentum in recent weeks as the US dollar sees some recovery in the market.

Bitcoin price

How can Bitcoin sustain momentum?

In the opinion of Willy Woo, On-chain local indicators are showing a bullish trend for BTC. This includes Holding activity, network activity and NVT ratio. The NVT signal, for example, identifies the peak value of the market by evaluating the price of BTC against daily transactional value. In the same manner, network activity is also indicating a positive outlook in the medium term for Bitcoin.

As the price of BTC has dropped from $12000, several data points indicate a bullish trend in the midterm. One interesting thing about the market activity is that the network activity has remained pretty stable even as the price of BTC fell nearly 20% from the year high levels.

Willy Woo said that the price of BTC might not have bottomed, but he is bullish about the next few weeks. He says that when you are playing the big swings, this is not a bad time to buy back BTC and go long for the medium term.

Many traders are closely observing the $9650 as this is the gap between CME Bitcoin futures market and other exchanges. This gap forms when CME closes during the weekend, and it has been steady since July. Once this gap is filled, it can lead to further bullish trends in the market, according to many traders.

Willy Woo also has a similar opinion on this gap, and he says that longs can get filled with solid liquidity at such gaps. He added that the big players in the derivatives exchange have the capacity to fill such gaps with strong liquidity and give a further boost to BTC shortly.

However, some traders are concerned with the high NVT ratio of the BTC. When this ratio remained Higher than 70 earlier, it had made a local top. This time around, the NVT is still close to 81.5, and this is a matter of concern for some traders.

Su Zhu, CEO of Three Arrows Capital, says that the probability of BTC moving to $100K is more likely than BTC declining to $5000. The amount of liquidity at $8800 levels on Bitfinex is giving a huge boost to the positive sentiment. Considering such indicators, many people are expecting levels close to $8800 as this can offer huge support for the next bullish trend.

Earlier in March, the price of BTC had declined 50%, and this is unlikely to happen shortly as the BTC has defended $10000 for a long time now. It has added many new investors in the recent past, and most of them are likely to add to their positions if they see any further downside. This can give it good momentum in short to medium term in the market.

Apart from this, even the Fibonacci levels are indicating good support for the BTC in the near term. While the immediate support comes in the range of $9665 levels, the near term support is somewhere around the $8100 mark. On the other hand, if both these levels are broken due to market conditions, the long term support is close to $7000 and most analysts expect that this will be the near term bottom for BTC if it comes to this level in this downtrend.

However, things may not go so bad if the CME gap is filled in the vicinity of $10000. In that situation, most traders expect some near term resistance near the $10400 levels for the BTC. If the price of BTC manages to hold this level for at least a few weeks, there is a good chance that it may even cross the previous high of $12500 in the upcoming months. Once this level is reached, the big bull rally will begin, and not many people are clear about what levels it can reach in the future.

The recent pandemic has triggered huge losses for various economies around the world. Given this situation, the dollar value is likely to get affected due to a stream of stimulus packages announced by the government. After the November presidential elections, the US may announce a host of big stimulus packages to boost the economy. All these conditions are providing a boost to the cryptocurrencies indirectly as they are weakening the currency value by offering stimulus.

However, governments have little choice in this situation. In this situation, most people look forward to investing in BTC and other cryptocurrencies that are not controlled by governments. This will be the future of international currency, and Bitcoin has a good chance of becoming the leader in the race. Once the previous high of $12500 is taken out, a new bull rally is likely to get triggered that can further boost the demand for BTC in the market.

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