Analyst: Bitcoin Could Continue To $45K In Coming Days
Bitcoin (BTC) has regained the highs of its current range. The largest crypto by market cap trades at $41,661, at the time of writing, with 22% profit in the weekly chart.
The general sentiment in the market has flipped bullish. The fear and greed index signals greed for the first time in months. Many experts have pointed out that other indicators also suggest a shift in the market, signaling that the bulls could see more green days in the coming weeks.
According to Glassnode data the amount of Bitcoin held by “strongest holders” recorded an increase. These holders have risen to an all-time high and suggest “bullish” price action, Illiquid Supply metric suggests.
Founder of Capriole Investments, Charles Edwards, revealed an increase in long-term Bitcoin holders. According to the HOLD Waves metric, these types of investors have been growing their supply since the May 2021 crash.
Edwards explained:
“This type of sharp rise never occurred in the early stages of prior bear markets, suggesting that there is a chance the Bitcoin bull-cycle is still intact.”
Source: Glassnode via Charles Edwards
According to Edwards’ data exchange platforms had their “first positive outflows” since last week when Bitcoin made a run from its yearly open at around $29,000 to its current levels. This metric suggests that the demand in the crypto market could be returning and could support further appreciation.
Few days before to the current price action, BTC dropped from about $35,000 to its yearly open. Edwards called this price action a “failed breakout”, as sellers were exhausted at those lows and were unable to push the price further down.
He opined:
“The ensuing squeeze to the upside was supported by a heavily short market, with over-exposure to stable-coin contracts. This resulted in a short squeeze over the last week which culminated on the candle highlighted (…)”
Source: Charles Edwards – Capriole Investments
Bulls Back In Control, As BTC Fundamentals Flip Positive?
According to Edwards there are other indicators such as the Hash Ribbons metric that look “promising”. The metric saw an important decline after China banned Bitcoin mining from the country, and miners had to migrate to other, friendlier destinations.
The Bitcoin hash rate and its Energy Value has been rising. Edwards found that both of this metric grew around 8%, indicating that the miners’ migration has ended. Another bullish factor, since these entities can stop selling BTC; the market could see selling pressure diminish. However, investors must remain cautious:
“Hash rate is showing a positive and strong trend, not dissimilar to December 2018, suggesting the bottom could be in. However, Hash Rate can give various false positives during capitulation. This is why we remain cautious until the Hash Ribbon buy signal is confirmed.”
In the coming days, Bitcoin could see more accumulation around its current levels with a “higher chance” of another leg up to the mid-range, $45,000. If BTC’s price retraces, the invalidation zone stands at $39,000.
The macro-economic outlook presents a potential tailwind and risk for Bitcoin. Edwards claims that the U.S. Federal Reserve and its inflationary monetary policy could continue to boost BTC if the financial institution keeps printing money.
There is a potential risk in the traditional market. If the stock market crashes, Bitcoin could follow. The cryptocurrency has displayed a high level of correlation with the S&P 500. In consequence, it could hurt its chances to reclaim previous highs in case of a dropped. Edwards concluded:
“For now, fundamentals and technicals are skewed towards the upside, and our base case is we will move towards the mid- to high-$40Ks over the coming weeks. In the near-term this thesis would be validated if we breakdown below $39K. Finally, Bitcoin cycle history tells us to be wary of significant volatility and downside risk until conditions are further improved.”
