- Bitcoin is technically in no man’s land a number of analysts have said after the crypto’s recent drop.
- The cryptocurrency, in fact, is below the $11,000 resistance, where BTC was rejected last week.
- Bitcoin is also above the support of the low-$10,000s, where a number of bounces have taken place over recent weeks.
- Four key market data points suggest that BTC will soon resume its ascent, though.
- There are also on-chain trends observed by a number of analysts that suggest Bitcoin’s prevailing trend is a bullish one.
The 4 Reasons Why Bitcoin May Continue Its Upward Ascent Soon
Since peaking at $12,500 late last month, the leading cryptocurrency has traded in a steep downtrend. The coin remains down $2,000 below those highs despite already bouncing by around $700 from local lows.
There are crucial market data points, though, that suggest that Bitcoin will continue its ascent in the near future. A crypto technician recently outlined these reasons in a Twitter thread:
- Bitcoin’s Fear and Greed Index has dropped to a level of “Fear” after reaching extremely high levels of greed in August. The index is calculated through a variety of data sets, including market sentiment, volume, social media trends, and more. Analysts think that this works as a sort-of counter-indicator, reaching levels of Extreme Greed when a top is near and vice-versa.
- Bitcoin is currently trading in backwardation, meaning that the price of futures for this market is below the actual spot price. According to the chart below, periods of backwardation are often seen prior to the cryptocurrency rallying higher.
- The funding rates of BTC futures markets are currently in the red or at neutral levels. This is similar to the last point in that whenever they are in the red or neutral, rallies are to be expected.
- There is a cluster of Bitcoin short liquidation levels above BTC’s current price, which the market will likely gravitate towards in the near to medium term.
Chart of BTC's price action since the start of July with a Contango Index analysis by crypto trader Byzantine General (@Byzgeneral on Twitter). Chart from TradingView.com
On-Chain Data Agrees With This
On-chain data agrees with the bullish sentiment shared by the aforementioned trader.
Willy Woo, a prominent on-chain analyst, recently commented:
“Another impulse of coins changing hands has completed, the next directional move over the coming weeks is likely upwards. It’s very unlikely we’ll see any kind of a catastrophic dump in price from here.”
Other on-chain trends such as the strength of Bitcoin miners, measured through the hash rate and network difficulty, also suggest a macro bullish backdrop to cryptocurrencies.
Featured Image from Shutterstock Price tags: xbtusd, btcusd, btcusdt Charts from TradingView.com These 4 Trends Show That Bitcoin's Likely to Move Higher After 20% Drop
