- Bitcoin is at a crucial point in its recovery, hovering just below $41,000
- The bounce off $30,000 has been met with strong buy volume
- The sentiment around Bitcoin has shifted once again in the past week or so to be bullish
Bitcoin is at a crucial point in its recovery following a strong week-long bounce off its recent retest of $31,000. It is currently hovering underneath a key resistance band that has the potential to usher in a resumption of the uptrend or send us back down to the low $30,000 region. However, several fundamental factors suggest that upside is more likely than down.
Bitcoin Looking to Break Out of Range
As we can see, Bitcoin has been ranging between two bands for almost a month ever since it’s huge drop in mid-May:
On each occasion when it has tried to break out above the resistance band it has rejected, prompting further calls for the $20,000s. These multiple rejections are no surprise when the importance of this upper band is realized:
As we can see, the $42,000 region is a critical one to break in terms of continuation, so it’s not a surprise that Bitcoin is having trouble breaking through, especially so soon after the collapse. However, the fact that there is enough buying power to be even thinking of attempting such a positive move is great news for those who are planning for a second bull run in 2021.
Buyers Have Turned up the Volume
One simple indicator that shows us that the tide may finally be turning in the bulls’ favor is the volume profile, which clearly shows a shift in trend since last month:
Since Bitcoin entered the channel, the amount of red candles has outweighed the green by some margin, showing that sellers were keen to dump their bitcoin at opportune moments. The most recent drop to $31,000 however, which occurred on June 8, has seen a shift in trend, with green candles suddenly outweighing the red. This means that buyers are consistently outweighing sellers on a continual basis for the first time since the drop last month.
Sentiment Has Shifted Again
We can also look at the shift in the Bitcoin narrative over the past few weeks as a guide for where things might be headed. Last month all the headlines were negative – institutions were selling and Bitcoin was killing the planet, headlines made, and perpetuated, by Elon Musk.
Just a month later and Musk is reiterating that Tesla still holds 90% of its bitcoin, El Salvador has adopted it as a currency, and Bitcoin mining is suddenly going greener than a frog on a waltzer. There is even a balanced article about Bitcoin in the Financial Times. Throw in the fact that Michael Saylor is about to buy $500 million worth and you have all the ingredients for a Bitcoin pump.
This shift in sentiment has coincided with the bounce on June 8 and gives us more reason to think that the tide has turned. A push and close over $42,000 should confirm this and allow those who lost out big in May to rebuild their battered portfolios.