Much like Stockholm syndrome, in which captives develop a psychological bond with their captors, cryptocurrency bear markets have a way of turning even the most bullish cryptocurrency supporters into bears in a short period of time.
On July 19, Bitcoin (BTC)’s rally above $23,000 was met with widespread warnings that the move was nothing more than a trap before the market headed for new lows.
Not bad. But keep in mind that this still can turn into a classical fake out.
My general thesis still remains, bear market rally pic.twitter.com/VxnH4mo6hW
— Jimie (@Your_NLP_Coach) July 19, 2022
While the possibility of new lows being set in the future cannot be ruled out, here’s a look at analyst views on how this BTC breakout could be different from what most investors expect.
This time “is different”
The message that “this time is different” was offered by the pseudonymous Twitter user Trader XM, who public the chart below explaining why BTC is poised to go up.
As highlighted in the chart above, the price of BTC did not touch the bottom of the range again, even when four visits to the top of the range occurred, and this suggests that the buyers are now stronger than the sellers.
In response to Trader XM’s post, Twitter user Justiinape replied “$27,000-28,000 seems imminent.”
Trader XM said:
“I agree my friend, a move to $27,000-28,000 then months of consolidation. Let’s enjoy this move before the long hibernation.”
The next major resistance is at $27,100
Further proof that BTC could go up was provided by on-chain data firm Whalemap, which public the chart below highlighting the lack of buying demand between $23,000 and $27,000.
whalemap said:
“$27,100 should be the first resistance on the way up. Big bid gap between current prices and $27,000.”
Short positions were wiped out
Proof that crypto traders had been lulled into an excessively bearish outlook was provided by crypto analyst Dylan LeClair, who public the chart below showing the effect Bitcoin’s move above $23,000 had on futures traders.
As highlighted in the chart above, there were a large number of short Bitcoin positions opened between June 15 and July 15 and these traders are now on the losing side of the trade.
LeClair said:
“Tens of thousands in open interest in BTC currently at a loss.”
While it is possible that Bitcoin will change course and go back down, the current momentum suggests further upside in the short term.
The total cryptocurrency market capitalization currently stands at $1.055 trillion and the dominance rate of Bitcoin is 42.1%.
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