Over the past few weeks, analysts have said Bitcoin is finally finding a local top.
For the third time in a matter of months, the cryptocurrency was rejected in the $10,000 range. It was a rejection that caused many to reconsider their bullish stance on BTC due to the level’s importance.
Though derivatives data and simple technicals suggest that Bitcoin is far from topping out. The data shows this even after a more than 150% rally from March’s capitulation lows.
This potentially imminent decline could erase virtually all of the gains that have come about as a result of the latest uptrend.
One analyst believes that it could even result in a full-fledged downtrend if buyers are unable to support the crypto above $9,100.
BTC rallies to &9,620 as analysts eye a move to $1,000
BTC 4 hour chart | Source: Tradingview
The crypto now appears to be pushing up against some heavy resistance. If it is unable to climb from here and faces any sort of swift rejection, it is likely that it will decline back to $8,800.
This is the level at which its ongoing uptrend first started at, as the defense of this support bolstered buyers and helped catalyze some momentum.
How BTC trends in the near-term will likely be determined by its reaction to the resistance just above its current price level.
Two of Bitcoin’s key moving averages also exist just above where it is currently trading. One analyst believes a firm break above these levels could open the gates for a climb to highs of $9,800.
Let $btc flip MA50 and 9800 comes. If reclaim fails, watch for 8400 & 7900 pic.twitter.com/TClJ77zwyQ
— CRYPTO₿IRB (@crypto_birb) May 28, 2020
One popular pseudonymous trader spoke about this in a tweet, explaining to his followers that there are a few factors suggesting that the crypto is fundamentally weak.
$BTC – Still remaining flat
Areas of interest:
* 94 – 95s
* Range highs
* Trendline underside
* Any signs of weakness and failure to hold 91s – then may flip short pic.twitter.com/QgeJltXmsG— TraderXO (@TraderX0X0) May 28, 2020
Here’s one potential path forward for BTC
Another respected analyst put forth this possibility in a recent tweet, offering a chart showing that BTC may push as high as $9,800 before declining.
“Previous plan was to short $9350s but this isn’t showing any weakness yet and I’m starting to think a scenario like below is likely to happen. Looking for this to get topped out 1st week next month,” he explained while pointing to the above chart.
Wall Street is in a BTC buying frenzy
This platform has seen rocketing usage in recent times, with traders leading it to see record high open interest on both its futures and options product just a couple of weeks ago.
While looking towards data regarding the CME’s futures usage, it grows clear that traders have been widely using it to gain long-term exposure to BTC.
As seen on the below chart offered by blockchain analytics platform Skew, there is a divergence between open interest and trading volume for CME futures – although this has been shrinking over the past two weeks.
Source: Skew
In mid-May, open interest was sitting at $532 million. Trading volume, however, was hovering within the $300 million region.
This divergence suggests that traders have been more prone to using futures to take long-term positions, rather than actively trading.
Disclaimer: This is not trading advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.
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