Here's Why The Current Bitcoin Rally May Be Extended

Here's Why The Current Bitcoin Rally May Be Extended

Prior to halving, Bitcoin climbed to almost $ 10,000, but many analysts and traders believe that the current bullish rally could be overtaken.

After May 11  th  , when Bitcoin halved its block reward, the coin dropped to $ 8,600 - $ 8,800 levels, but it managed to take the rhythm back and start rallying again to pass $ 9,000 levels. .

A leading trader, JOE007, who lost $ 20 million in a month due to his anti-rally Bitcoin positions , said the current bull run has overstepped its limits.

He called the Bitcoin rally an "organized FOMO rally," with large whales manipulating the price using the "halve" motive.

“The weekly Bitcoin chart is the definition of illiquid altcoin. Hilarious cycle he went through. I hope that the halving will financially destroy as many Chinese miners as possible and that we can have a legitimate bull market instead of this pumping and dumping film. "

Binance co-founder and CEO Changpeng Zhao was happier about it as his trade hit a new record for its 24-hour transaction volume ($ 16 billion), posting on Twitter that   "FOMO mode now".

Nigel Green, founder and CEO of Vere's independent financial advisor, believed that this FOMO could raise the price even higher in the crypto and traditional markets in the coming weeks.

"With an ongoing recovery, they don't want to miss the current market value in the long term, which has the effect of driving the markets up. We are witnessing what is likely to become a powerful recovery in global equity markets as investors look to the second half of 2020 and 2020, "   said Green.

After the mid-March market crash, which brought Bitcoin back to a low of $ 4,106.98 in 2020, with a loss of almost 50% overnight, sentiment surrounding the period preceding the halving has reduced the price to almost $ 10,000, a crucial level of resistance.

Traders were very optimistic that the price would continue to rise even after the halving, but much to their disappointment, it fell to $ 8.601.80 the same day. Bitcoin recovered at $ 9,317.88 on May 13  th   and continued to rally at new resistance levels for a week, but fell again and stagnated between $ 8,800 and $ 9,300.

The decrease in block reward affects the Bitcoin community and market in many ways. Some miners will be forced to close their activities because their business is no longer profitable. In order to make ends meet, they would have to sell the Bitcoin they make at a higher price to cover operational costs.

This purchasing pressure is then reflected in the spot market. Given the COVID19 pandemic, which has significantly affected all financial markets, all asset managers, hedge funds, family offices and even ordinary people would panic and liquidate volatile assets in cash to reduce the risk of news losses.

This type of phenomenon is called a liquidity crisis. The sharp drop in prices in mid-March in Bitcoin and the US benchmark S&P 500 occurred due to a sale caused by panic. Second, central banks and governments have launched liquidity injection programs to bring capital into risky markets. As a result, the price of Bitcoin has also increased.

But the crisis is still ongoing and its effects on the market are very likely to be lasting. Thus, it is not yet certain that investors will continue to use risky assets while the coronavirus pandemic continues. And of course, this also affects the price of Bitcoin .

According to JOE007, many do not take into account the low liquidity of the BTC market . The trader also speculated that it was possible that Tether's stablecoin , the USDT , could have been used to artificially raise the price of Bitcoin to entice people to buy in the narrative of the halving.

Additionally, the trader expects Bitcoin's long-term bullish momentum to continue, powered by systematic demand generated by institutional and retail investors.

A trader who goes by the name of Big Chonis trading also suggested that in a tweet before he noticed the formation of a TD9 signal on the daily chart on April 30  th  . The TD9 is a TD sequential system that turns on when a crypto coin crosses an extended rally, and an imminent price correction is expected.

“The # bitcoin is cut in half in 11 days… A lot of time for one more FOMO pump…? Difficult to ignore the closing of yesterday's candle, which opens today on a TD9 ”,   tweeted the whale seller.

Cryptocurrency technical analyst Zoran Kole believes that in the near future Bitcoin will fall back into a range of support between $ 7,700 and $ 8,000. During the $ 9,500 coin race, the Bitcoin market experienced an excessive rally, with bulls pushing the probability that it was a local high.

“Personally, I think the local summit is in place. Slightly premature to call it, but it looks like a SFP of the liquidity void of 9.2. Bears have blown the f- out. Euphoric bulls. I would like 84xx to be maintained to continue, otherwise 7,7-8k is the next area of ​​long-term interest ",   - said Kole.

Thies predicts that if the BTC drops below the support level of $ 7,000, this would most likely result in a renewed downtrend.

“If necessary, $ 6.8k and $ 6.4k are below it, but a move towards these levels would indicate a continuation of the downward trend which brought prices down to $ 3800 in the past year, after having peaked at around $ 15k in July 2019, ”-   explained Thiès.

Bitcoin's convergence in the face of rejection at a major resistance of $ 10,000 since March 12, a TD9 sell signal, the rally ending just after BTC halved and the coin settling in a lateral trading model all indicate that Bitcoin is at the end of its bullish run. However, the pursuit of a positive dynamic cannot be totally excluded.

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