Bitcoin
This Trend Suggests Bitcoin is Extremely Bullish Despite Recent Selloff
Cole Petersen | Oct 28, 2020 | 18:00
- Bitcoin saw a strong overnight selloff that caused its price to erase most of the gains incurred throughout the past couple of days
- This selloff came about at a crucial resistance level, with the selling pressure at $13,800 proving to be significant
- This is a historical level, as it is where BTC rallied to before facing a strong rejection in the summer of 2019
- The rejection here was grave, but the cryptocurrency still has multiple factors working in its favor
- One analyst is pointing to a spot premium as one such factor that could bolster BTC
It has been a rough past few hours for Bitcoin and the aggregated crypto market, as the benchmark cryptocurrency saw a harsh selloff after its price rallied as high as $13,800.
The selling pressure at this price level was significant and came about swiftly, suggesting that it may be quite some time before we see a sustained move past $14,000.
Despite this decline’s overt bearishness, there are still many factors that are working in bulls’ favor.
One such factor is a premium to buy spot Bitcoin versus futures contracts, suggesting that there is currently a wave of retail and institutional interest driving demand for spot BTC.
Bitcoin Rejects at $13,800, Plunges to Key Support
At the time of writing, Bitcoin is trading down just over 2% at its current price of $13,320. This is around the price at which it has been trading throughout the past few days, but it does mark a serious decline from its daily highs.
These highs were set yesterday afternoon when the crypto rallied as high as $13,800. The rejection here was grave and instantly sparked a decline that led BTC down to its current price level.
Whether or not it can find support around its current price should provide significant insight into its near-term outlook.
Analyst: Demand for Spot BTC a Bullish Sign
While sharing his thoughts on Bitcoin’s current outlook, one analyst explained that a premium seen while looking towards spot BTC indicates that there is massive retail, corporate, and institutional demand.
He deems this a highly bullish sign.
“A higher spot price & higher spot volume (relatively speaking) is considered bullish because it means that the rally is based on actual buying instead of degenerates gambling on derivs.”
Image Courtesy of Byzantine General. Source: BTCUSD on TradingView.
Where the market trends in the next few days should determine the long-term significance of this Bitcoin rejection. A sustained decline could be a highly bearish sign.
Featured image from Unsplash. Charts from TradingView
