BTC $40k Again

By Lucasgaio | Cryptoscience | 6 Dec 2023


On December 3, 2023, after almost 20 months, Bitcoin regained the $40,000 mark. It was April 2022 when, after an intense bull-run, $BTC fell below this support and then never exceeded it again. Since then there have been almost two years of bear market with the consequences we know well. During the last weekend, however, Bitcoin found the strength to approach the last resistance and then broke through it, dragging the entire crypto ecosystem with it. There is little that can be done, Bitcoin is certainly not an asset that leaves room to relax and for this reason we now begin the analysis that leads us to discover what happened and what the near future holds for us.

The force that is pushing Bitcoin cannot be attributed only to the latest international news such as, for example, the imminent approval of the spot ETF in the USA. In fact, a set of factors must be considered that together contribute to making BTC an asset that in the last year alone has performed better than many others, effectively returning among the top 10 most capitalized assets in the world.

 

1. DIFFICULTY: Mining difficulty has not seen any significant negative adjustments over the past year. In fact, computing power has undergone a growing trend that goes against the historical trend of the price increase. Furthermore, December 1 marked a new annual all-time high for this figure. Finally, in recent months, we can see how each difficulty adjustment is pointing upwards, which indicates a greater contribution from miners to the network.

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Glassnode 

 

2. DOMINANCE: Bitcoin Dominance, with the latest leg-up, has gone above 50%. This data means that Bitcoin alone effectively covers more than half of the capital in the crypto world. Usually, when BTC gains ground in Dominance, altcoins suffer and do not perform well. However, the trend has been growing since the beginning of 2023 and, wanting to make a more technical comment, we can also see how in this graph from Tradingview the EMA50 and the EMA200 are crossing to form a Golden Cross.

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Tradingview

 

3. MARKET CAP: Even in the total marketcap graph, Bitcoin is performing well, aiming straight for 1Q. It is currently trying to break through a resistance between 900B and 1T, where it has already hesitated in the past. Not many predictions can be made in this regard since close to these thresholds the outcomes are often uncertain. The conditions for trusting in a further upward push, however, are all there. Media interest is in fact increasing and with it comes new incoming capital.

 

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4. TECHNICAL ANALYSIS: From a technical perspective, BTC/USD is moving as if it is climbing a ladder and does not hesitate to go back. He didn't even have time to win the 40,000 dollars before he immediately set his sights on 45k. While this may seem bullish on the one hand, we must never forget how dangerous chart overextension is. In fact, once a resistance has been broken through, before moving on to the next one it should be tested again and thus make it become a support for the price in the future. For now, Bitcoin has forcefully broken through the resistances at $35/36k and $40k, effectively targeting the area above. The exponential moving averages are rising and starting to distance themselves from the price. The RSI also entered the overbought area, highlighting investors' willingness to buy. All this data confirms that the bullish trend is showing no sign of stopping, vaguely reminiscent of the market sentiment that was felt after the last halving.

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5. FOMO: literally "fear of missing out", a fear felt especially by those entering the crypto market at this time characterized by rising prices. This sentiment leads the inexperienced investor to invest without a strategy and purchases are often made out of fear of not being able to seize the opportunity. Fomo fuels the price of an asset significantly when it is "trending", but causes irreparable damage when the investor loses control.

 

6. SHORTAGE: Bitcoin is a scarce asset and its shortage at the level of centralized exchanges is impacting the price. I analyzed a bull-case-scenario in this article. In summary, more and more investors are demonstrating their intention to move their savings to private wallets and no longer hold funds on CExs. This means that the reserves of the exchanges have been in a sudden and linear decline for some years now, configuring an increasingly concrete possibility: a supply-squeeze. To complicate the picture, the entities that are playing an increasingly important role in the accumulation of BTC, and therefore in removing the coins from the price equation, are institutions. In fact, large companies and public companies have begun to purchase large quantities of them, effectively becoming whales with immense capacities.

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Conclusions

Two years of bear market and all the problems that emerged during this period have certainly contributed to changing the market and making it more aware. The cycles, however, rarely repeat themselves in the same way: in the one that has just begun, in fact, new institutional players play. These entities have much larger capitals than the retail user who just wants to save. We will therefore see if the entry of liquidity into the sector will be able to change the price of Bitcoin as an asset and what influence it will have on the crypto market in general. What is certain, however, is that after the halving in April 2024, interesting scenarios will open up and certainly worth keeping an eye on. Bitcoin will be more mature and (hopefully) ready to respond to the pressure exerted by new entrants.

 

 

Read also: How to Live on Crypto: Bitrefill

 

 


 
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Lucasgaio
Lucasgaio Verified Member

Having survived more bear-markets than I wanted to, I'm a pharmacist who likes crypto. Follow me on X: https://twitter.com/Lucasgaio_ Follow me on DeBank: https://debank.com/profile/0x1cd7b2c89cd42580bec1844087f62060edd80d75


Cryptoscience
Cryptoscience

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