Bitcoin price soared to a 30-day high but this breakout may not be the start of an uptrend

By Selena On Jan 7, 2020

Bitcoin price soared to its highest level in 30 days after posting one of the biggest rallies of the week. Bitcoin’s bulls were able to significantly broaden the momentum they first created when Bitcoin hit a low of $ 6,400, with this momentum reaching a feverish when Bitcoin rose to the $ 8,000 resistance level.

It is important to note that some analysts are cautious about being too excited about today’s movement. Because maybe, in the end, this will be just a short rally, and the sudden spurt may not mark the beginning of an uptrend.

Bitcoin price heads for $ 8,000 when the market is booming with excitement

Bitcoin’s rally pumped more than $ 4 billion into market capitalization in five hours. At press time, the Bitcoin price is up 4.5% for $ 7,862, marking a noticeable increase from the recent low of $ 7,400 set two days ago.

The rally seems to have catalyzed a positive change in the cryptocurrency market but was not convincing. The Crypto Fear & Greed Index rose two points out of a hundred after the rally, from 39 to 41. Today’s Bitcoin price action for $ 8,000 signals shows recent lows, $ 6,400, having could mark a long-term bottom.

Despite the excessive price rise, Bitcoin has undergone a series of protests over the past few weeks, followed by initial scans, and it’s too early to say this time is different.

Cantering Clark, another famous cryptocurrency analyst on Twitter, said:

Try not to lose your minds yet people.

The market is meant to get you extremely bullish when it is expensive, and extremely bearish when it is cheap.

Same idea works in 1460$ ranges.

Anyone who buys up here for any reason other than long term holdings is COO COO. $BTC pic.twitter.com/TJmuE03pXr

— Cantering Clark (@CanteringClark) January 6, 2020

The existence of Bitfinex begins to deteriorate

The number of long positions on Bitfinex – a figure that in November reached a historic high – has finally started to erode. This shows that Bitcoin’s recent uptrend seems to be an opportunity for long-term holders on Hong Kong-based exchanges to lift their positions and gain profits.

BTC/USD longs, Bitfinex | Source: TradingView

If this trend continues and long-term Bitfinex holders exit their positions at this level, the short-term selling pressure can be fierce. The long positions worth nearly $ 320 million are currently on the Bitfinex order book, making the platform inclined to the bulls (now accounting for 91.3% of all positions on Bitfinex).

Volume and open interest remain inconclusive

Hourly volumes on BitMEX and Bitfinex margin trading platforms have skyrocketed to their highest level since mid-December, however, in terms of profits on more top time frames, this volume is negligible. This makes people doubt the chances of an uptrend continuing.

The total volume on the Bitcoin market is still down about 90% from June 2019 levels, and the latest spur-driven volume is part of which marks the beginning of the month-long rally of BTC from April ($ 4,000) to June ($ 13,800) last year.

XBT/USD volumes | Source: TradingVIew

Data from futures markets also show that the latest rally may not have added legs and that a pullback could be in order.

Importantly, all futures trading platforms have seen very little increase in open interest – a sign of new buyers coming into the market. In recent days, the monthly contracts of Bakkt and CME, as well as the permanent XBT/USD BitMEX contract, have seen a fair amount of pay in terms of volume, but not the double, or triple digits in open interest rate that people expect when starting a strong uptrend.

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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