As a seasoned researcher with over two decades of experience in financial markets, I find myself intrigued by the current state of Bitcoin. The recent surge to around $67,400 is indeed impressive and reminiscent of the 2017 bull run that I had the privilege to witness. However, it’s crucial to consider both the bullish and bearish signals at play.
TL;DR
- Bitcoin soared to around $67,400, with some metrics suggesting potential for further gains.
- However, some bearish signals, such as an overvalued MVRV ratio and overbought RSI, indicate a possible price pullback.
BTC Price Explosion Incoming?
The cost of the top-ranking cryptocurrency has soared by more than $8,000 in the last week, now sitting at approximately $67,400 (as per CoinGecko’s statistics). This surge has sparked immense excitement among BTC supporters, who believe that the long-awaited “Uptober” is now upon us.
Some key signs suggest that the asset hasn’t experienced significant growth as yet. One such example is the amount of Bitcoin stored on exchanges, which, as per user Ali Martinez, has recently dropped to a five-year minimum.
This type of growth is typically viewed as positive because it implies that users could be moving from centralized services to self-custody solutions (which lessens immediate selling pressure). Furthermore, based on basic economic principles, Bitcoin’s price should trend upward if demand stays steady or rises while the supply decreases.
A metric hinting that BTC could be ahead of a more volatile period is the growing Open Interest. As CryptoPotato reported on October 15, the figure reached an all-time high of $19.8 billion. It kept rising in the following hours, surpassing $20 billion on October 16 (per CryptoQuant’s data).
The surge in OI is accompanied by Bitcoin funding rates reaching their highest positive levels over the last two months. This suggests that a majority of open interest consists of long positions, which, along with the increasing demand as reported by CryptoQuant’s CEO, strengthens the argument for an upcoming bull run.
Some Bearish Factors
Contrary to the aforementioned indicators suggesting that the primary cryptocurrency could experience another bullish momentum soon, some hint at the opposite scenario.
The Market Value to Realized Value (MVRV) of Bitcoin, as an example, has been steadily rising over the past week and recently surpassed the significant threshold of 2. When this ratio exceeds that level, it often suggests that the asset might be overvalued, potentially leading to a correction or pullback.
The Relative Strength Index (RSI) is an upcoming topic. This technical analysis device gauges the pace and direction of price fluctuations, often employed to detect overbought or oversold situations. When the ratio exceeds 70, it signals that BTC may be in overbought territory, suggesting a potential correction might be on the horizon. Lately, the RSI has been staying above this threshold for the past three days.
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2024-10-17 13:52