BTC - Will we get a relief bounce?
Assets covered: Bitcoin (BTC)
Metrics used: Price, Daily Active addresses, Age consumed, Supply on Exchanges, Weighted Sentiment (Twitter)
After 3 months of consistent dumping, BTC eventually bounced off the yearly open zone, which is an important area of opportunity for traders.
A breakdown from this level will spell goblin town for BTC, opening the bear road to the $24ks and with some calling for $20ks.
This recent bounce also coincided with the B Word event where Elon Musk, Jack Dorsey, Cathie Wood spoke about BTC. Naturally, you can expect speculators to buy into the event and thereafter, the price action would be dependent on what was said during the event.
From the looks of it, speculators are being hopeful at the moment.
Zooming in, it does make one wonder whether the recent breakdown was a fakeout to trap late shorters.
Below we can observe the liquidation games rekting both sides of the trade.
The breakdown liquidated any eager longers out there (probably to speculate on the B Word event), this breakdown actually sent most of the space into a bearish mood and naturally Shorts started to pour in.
Eventually these late shorters got punished and helped to propel us back above $30,000.
So far BTC is still hovering above $32,000 and avoiding the goblin territory. As long as it does so, we might just have a chance to push upwards with the next stop: Breaking that resistance trend line in the $33,000s.
What would send us there?
Looking at the funding rates, we are seeing strong negative or neutral funding rates for the past 2 months. Bears have been building their positions ever since the bulls got rekt in late May.
Funding rate today is still rather negative, indicating that most people are shorting the recent rise and given that BTC is at resistance now, people are betting that it'll fail.
However... if it doesn't... it looks like we'll be getting liquidation fireworks from shorters, which will propel us further and breaking that resistance.
BTC's Daily Active addresses continue to trend downwards along with the price.
Overall, we are seeing levels of activity lower than what we observed 1 year ago (price action was rather boring then), which isn't looking all that great on-chain wise.
BTC's Supply on Exchanges continues to trend down, which is great for reducing overall sell pressure. However, it recently saw a huge spike, just 2 days before BTC's price broke down.
On the same day (17th July) where we saw huge spike in Supply on exchanges, there was a huge spike Age consumed as well.
Such big spikes indicate that large amount of coins that have not moved for a very very long time have started to (for whatever reason). This could be intention to sell, market make, swapping wallets, etc.
No one knows for now but when such a move is made, it's worth paying attention.
The recent pump saw Twitter sentiment going from the negative to high positives but that was short-lived as we quickly fell back into the negative zone again, indicating that in this period, people are more likely to be bearish than bullish (just look at the overall amount of time we spent in the negative zones).
Can't blame them as BTC's price have not shown much strength lately either.
BTC continues to struggle to establish any firm signs of a reversal from the bear trend, and is currently at sitting critical levels, right before opening the doorway to $24,000 levels and beyond.
Bull are pretty much gone since late May based on derivatives data. Meanwhile, shorters been piling in with each pump they can get and have been doing so for the past two months now.
However, this pro-longed bearishness and expectation of BTC heading to $24,000s can set shorters up for a nice short-squeeze if BTC's price continue to inch upwards from here.
Also, Twitter sentiment is still overall bearish. If anything, we are starting to see healthy signs for establishing a reversal.
It's make or break time for BTC - Goblin town or Relief rally.
Disclaimer: The opinions expressed in the post are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product.