Bitcoin Setting Up For Another Surge
VYSYN Ventures Weekly Insights #63 - Key signals suggest an imminent bull-run for Bitcoin soon
Bitcoin has been on a bullish trajectory, overcoming key levels on it’s rise towards $50k. Market data suggests that the majority of market participants hold bullish outlooks. Significant premiums are returning in the dated futures markets while funding rates in the perpetual futures markets are also on the rise, suggesting a bullish predisposition from the traders in these markets.
In the latest VYSYN Release, we analyze the recent price movements of Bitcoin and other cryptocurrencies. We consider how this has impacted the sentiment of market participants and what the data suggests about future price movements.
Bitcoin’s strong recovery
Over the past month, Bitcoin has increased by roughly 64%, rising above key resistance levels and returning to test the $50k level. This appreciation comes after a prolonged period of range bound trading between $30k and $40k with price struggling to break from either end.
All of this unfolded after Bitcoin recorded an all-time high of roughly $65k in April of this year. However, at this point, there were several signs that the market was overheated, such as excessive risk being taken by retail investors. Unforeseen bearish developments like negative commentary from Elon Musk and regulatory crackdowns in China further spurred the negative sentiment.
However, this recently turned around as smart money entered the market, leveraged short traders were pushed out, and a series of bullish news hit the market. Since these developments, bullish sentiment has dominated the Bitcoin market. Negative news has failed to impact price movements while positive news began resulting in significant price jumps. A blockchain-related job posting from Amazon had a particularly bullish impact on market conditions. Rather, the opposite has been the case.
Bitcoin market participants turn heavily long
Bitcoin has been in a strong upward trend since touching it’s yearly open of ~$29k. Market participants have started to turn heavily long. Premiums in the dated futures market have started to widen, showing that traders in these markets have been going long. The premiums in these markets are still far less than their double-digit percentages in April but the widening premia are certainly indicative of bullish market conditions.
Similarly, premia in the perpetual futures market have been increasing. This is indicative of market participants going heavily long in this market, providing further upside pressure to price but also making price prone to long-side liquidation squeeze if price reverses.
Technical indicators are also kicking in and set up for what could eventually turn out to be a perfect storm for Bitcoin, and by extension, the overall cryptocurrency market. An indicator that signaled a 250% surge in Bitcoin price the last time is about to be triggered once again. The “BTC Hash Ribbons” has made a cross-over in a highly oversold region, suggesting the beginning of another bullish trend.
Whales are setting up to buy the dip
Monitoring the activities of Bitcoin whales and institutional investors has also revealed a behavioral pattern that suggests that they are getting ready for another round of huge purchases. According to reports, on-chain data at the beginning of the week showed that $222 million worth of Stablecoins flowed from individual wallets into centralized exchanges in the cryptocurrency marketplace.
Traders and investors usually adopt stablecoins to protect against market volatility, especially when they do not expect profitable price movements. Also, to stay safe from hackers and thieves, most of these investors prefer to store their digital assets in personal wallets, rather than on centralized exchanges.
The Stablecoin inflow and outflow metric is a predictive indicator that helps traders understand what the whales and institutional indicators may be preparing for. The difference between the two, known as net flow, provides information on the overall market sentiment. When the netflow is positive, it means that more Stablecoins are in the system in preparation for the buying of Bitcoin or other cryptocurrencies. On the contrary, when the net flow is negative, it means that investors are pulling out their funds from the exchanges to protect against volatility, and are therefore not interested in buying.
The significant inflow from individual wallets into centralized exchanges is suggestive of imminent purchases. Coupled with the various indicators described above, and the current market behavior, everything seems to be falling into place for another price surge for Bitcoin and the entire cryptocurrency market.
In the short-term, Bitcoin still needs to overcome strong seller liquidity between roughly $50k to $51k. If Bitcoin prices can sustain prices above this territory, the odds that the price will recover to all-time highs will be far higher and Bitcoin may embark on a momentous bull run.