Bitcoin has surged past $40,000 to currently trade at $40,200 at the time of writing this report. This recovery represents a 28.85% bullish bounce from Sunday’s low of $31,200.
Traders expect a broader rally to come and a bullish market structure to form if Bitcoin continues to rise above $42,000 and Ether (ETH) reclaims $3,000.
The recovery in the price of Bitcoin and the altcoin market has been triggered by 3 major factors:
• Tesla CEO Elon Musk and MicroStrategy CEO Michael Saylor have been encouraging Bitcoin miners to use cleaner energy. Musk and Saylor have gone further to speak with Bitcoin miners in the United States about reliable energy consumption.
• The Bitcoin futures market reset to a large extent. According to the data from Bybt.com, when BTC crashed to the $30,000 trading range, the futures market open interest dropped from $27 billion to $11 billion. This means that the futures market is not overcrowded, fostering a more sustainable and gradual rally.
• Ethereum has been rising rapidly over the past few days, pushing towards the $3,000 mark, which also benefits Bitcoin and altcoins because ETHER saw a deeper correction than BTC.
Major cryptocurrencies rebounding as a whole is improving the sentiment around Bitcoin, leading to the gradual recovery of the cryptocurrency market.
In the short term, traders say that $42,000 is the important short-term resistance area and after that, $49,000 is the macro sell area. A pseudonymous trader, known as “Pentoshi” stated, “Many alts coming into some resistances +/- a 5% We’ve gotten mean reversion as discussed during the nuke. However, $BTC has been stuck. It started its LH trend a month ago. Would like to see Bitcoin pop + 42k or alts likely make their own LHs and dip again. Clock is ticking.”
Below is Pentoshi’s chart analysis.
For now, cryptocurrency investors must look to two key observations for Bitcoin and the entire cryptocurrency space which are the exchange outflows and the $42,000 level. Ideally, if the $42,000 level holds and Bitcoin exchange outflows increases in tandem, that would mean that the confidence of investors in BTC and whales at above $42,000 is rising.
Concerns of a “dead cat bounce” are also on traders’ lips. This is a term used to describe a short-lived recovery. Traders are looking up to BTC to hold the $42,000 trading range which substantially decreases the chances of it occurring.