Just weeks ago, certain analysts were calling that Bitcoin (BTC) was topping. These crypto investors used terms like “strong correction” and “bearish retracement” to describe what they expected to come to fruition.
While they were partially right, in that BTC fell to $7,450 from $9,100 in a week’s time, what followed was shocking, catching traders with their pants down. Since hitting $7,450 just a week or two back, Bitcoin has exploded higher, with bulls clearly showing they are in control.
In fact, as of the time of writing this, the leading cryptocurrency has hit $9,800 — implying a seven-day performance of 19%. Tell us, what other large-cap asset has done that in the same time period? Altcoins seem to be following suit, posting similar gains to push the aggregate cryptocurrency market capitalization to just shy of $300 billion.
What’s up With Bitcoin?
Right now, analysts are divided on where exactly Bitcoin is headed in the short-term. Namely, the cryptocurrency was strongly rejected by $9,800, falling to $9,690 after encountering it on Friday morning. Most, however, are decidedly bullish.
As analyst Josh Rager explains, Bitcoin closed its daily candle above the 0.382 Fibonacci Retracement at $9,600, which is where some traders expect to take profits. The fact that BTC has managed to hold above that level is, in the eyes of Rager, a sign that bulls still have room to run.
Related Reading: Bears Beware: If Bitcoin Breaks Above $11,700 Nothing Will Stop It from Climbing Towards All-Time-Highs
Indeed, as Cantering Clark, a well-known cryptocurrency trader, recently pointed out, the number of Bitcoin shorts on Bitfinex has begun to rise rapidly. In fact, there is now 26,700 BTC worth of shorts open on the platform, implying that there are many bears expecting a drawdown.
— Cantering Clark (@CanteringClark) June 20, 2019
The thing is, the last time that such a massive number of short-sellers put their money where their mouth is, a massive short squeeze occurred. You can see it in the chart above, which shows colossal red candles in open short interest — the Bitcoin-boosting short squeeze of Q2 2019.
In fact, that squeeze is what Willy Woo, a prominent Bitcoin researcher and on-chain analyst, claims is what allowed BTC to surmount $6,000, $7,000, and $8,000 in rapid succession during May’s historic surge. As Woo explained:
“When the market is majority short, there’s too much money to be had to allow them to win… Whales keep buying up the market until the shorts get liquidated, [forcing the seller to buy back Bitcoin at market price].”
If history is of any indication, once bulls manage to push Bitcoin to a certain price, be it $10,000 or $11,000 or something else entirely, there may be a massive chain reaction in shorts covering, leading to an even further move to the upside. This could happen soon, and quickly.
$10,000, the Level to Watch
In this move, all eyes have been kept on the auspicious $10,000 price point. Most see this level as a validation of Bitcoin’s revival. Or as Fundstrat Global Advisors’ Tom Lee put it best in a tweet, “[$10,000] will see FOMO from those who gloated about the 90% crash in BTC… and those who saw Bitcoin dead as forever.”
Indeed, during 2017’s rally, all analysts and mainstream media alike asserted that $10,000 was the level to keep an eye on. More importantly, $10,000 also acted as a key level of resistance and support during 2018’s tumult.
The importance of a five-figure Bitcoin has led many to claim that once BTC breaches $10,000, all proverbial hell may break loose. In a recent tweet, Tyler Winklevoss, the (purported) Facebook pioneer turned Gemini co-founder, claimed that once the cryptocurrency surmounts the aforementioned price point, “you can bet it’s going to break $15,000.”
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$15,000 — over 50% higher than current levels — may just be the tip of the iceberg though. According to Lee, once Bitcoin reaches $10,000, “Level 10” FOMO will grace this market, which last occurred when BTC blipped above $4,500 in late-2017. If history is any guide, the cryptocurrency market will shoot even higher once $10,000 is breached.
In a recent podcast with Binance’s chief financial officer, Wei Zhou, Lee surprisingly opined that there will be a “fast and furious” move to $20,000 following a break and close above $10,000. And from there, Bitcoin will double in the next five months, reaching $40,000 in a jaw-dropping move.
Bulls in Control
No matter what exactly comes to fruition, it is important to note that Bitcoin is currently situated in the midst of a massive bull trend.
As spotted by popular analyst Filb Filb, the Moving Average Convergence Divergence (MACD) on Bitcoin’s one-month chart is about to experience an extremely bullish crossover. More specifically, the indicator, meant to observe overarching trends, is about to see its third monthly bullish cross in Bitcoin’s history.
Bitcoin is about to have its third monthly bullish MACD cross of all time.
Its worked out pretty well in the past. 😈 pic.twitter.com/5UtrPJPsGL
— fil₿fil₿ (@filbfilb) June 20, 2019
The last time that this was seen was when BTC embarked on its bull run from the low triple digits ($300) to $20,000. While short-term MACD readings often are susceptible to so-called “fake outs” (fake breakouts), the one-month MACD is a solid indicator for long-term price action.
Featured Image from Unsplash. Chart Courtesy of TradingView.com