After Bitcoin’s crash early this week, the cryptocurrency has found itself trying to establish a base for the next move.
While there are many analysts professing that BTC is “showing weakness” at current, a prominent trader recently gave an in-depth explanation as to why he is buying the asset around the $8,500 to $8,600 level, where it was trading just hours ago per data from TradingView.
The Case for a Bullish Bitcoin Reversal From $8,500
LightCrypto, a prominent cryptocurrency market commentator, on Friday explained why he is a “buyer of BTC at the $8,500-$8,600 level, near 20% off the recent local high” of $10,500.
In a Twitter thread outlining his stance on Bitcoin, he remarked that the asset has held up surprisingly well as gold has fallen off the face of the Earth, relatively speaking, plunging under $1,600 after nearing $1,700.
/3 Gold is down the most since 2013, possibly sold to cover margin calls – this is a further sign of an emotional and capitulatory macro environment. In all of this, Bitcoin has held, losing less on the day than gold(!). pic.twitter.com/EDcIYNNCyQ
— light (@LightCrypto) February 28, 2020
Light further accentuated that BTC has bid-side demand when he wrote that while there have been “multi-million dollar market sells into a confluence of potential support levels,” Bitcoin has held, suggesting “latent buying interest”:
“The tuned-in market observer has also seen tremendous absorption of chunky multi-million dollar market sells into a confluence of potential support levels. This sort of spasticated action with price not budging downwards is indicative of a large, patient latent buying interest.”
This somewhat optimistic technical picture has been underscored by a growing tide of bullish fundamental factors for Bitcoin: Light wrote that the impending nature of the block reward halving in May 2020, the likely interest rate cuts from the world’s central banks, and the fiscal stimuli being promised by the world’s governments make “Bitcoin’s inherent tilt […] overwhelmingly bullish.”
Not Only Optimist
Light isn’t the only optimist in these frothy crypto markets.
Yesterday, this writer shared the below chart on Twitter, building off a comment from Brave New Coin’s Josh Olszewicz that spikes in the stock market’s volatility have correlated with Bitcoin bottoms.
This writer’s analysis found that every time the VIX, the CBOE’s volatility index derived from S&P 500 options data, passed 30 in the past five years, BTC has found itself at a macro or local bottom.
Case in point, a case when the VIX hit 30 in 2015 marked the macro bottom at $220 that preceded the rally to $20,000. And more recently, the VIX passed 30 in December 2018, just a week after Bitcoin found a bottom around $3,150.
.@CarpeNoctom suggested spikes in the VIX correlate (spurious?) with Bitcoin bottoms. He's not kidding.
Times the VIX passed 30 in the past 5 years:
Dec 23, 2018: a week after BTC fell to $3,150
Feb 3, 2018: when BTC bottomed at $6,500
Aug 22, 2015: when BTC bottomed at ~$220 pic.twitter.com/vS7E60rNJp
— Nick Chong (@_Nick_Chong) February 27, 2020
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