Is This the Bitcoin (BTC) Top? Smart Money Says No
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The recent Bitcoin (BTC) dip to under $56,000 unnerved traders once again. The correction is not outsized for BTC, but the price has remained stagnant for a stretch of time. The question of whether $60,000 is the market top, or just another milestone to conquer, resurfaced on social media.
But there are still indicators that despite diminished trading BTC is still overdue for a bigger price move. One of the most encouraging indicators is that this time, “whales” are not trying to cash out. Whether recent or older investors, the current price levels do not invite mass selling.
The sentiment of the Bitcoin fear and greed index is still in the greed range, though at a more subdued level of 70 points. Ahead of the weekend, BTC stood at $58,336, with an estimated resistance at $59,500. Weekends are a traditionally active time for price action, with the potential for more activity after a few days of sideways movement.
The other positive indicator for potential growth is a new cycle of accumulation from miners. After highly active selling in the first months of 2021, at levels above $30,000. When it comes to mining, the prices of equipment are also a bullish indicator.
The new Antminer S19 rigs retail above $5,000 and are sold out. One of the older models, the S9, is on offer above $3,500. Mining rig prices tend to drop during periods of market panic. Currently, BTC mining is highly competitive and is near an all-time high, after months of lower rates and some miners capitulating over the inability to cover costs.
BTC Has Strong Support Above $53,000
The mark of $53,566 is where the entire market cap of BTC reaches $1 trillion. This cutoff level is viewed as significant for showing the confidence of on-chain participants.
The longer period of trading and transacting above that threshold does not preclude a price dip. But so far, the bias remains in favor of an upward move in the coming weeks.
The current positions are suggesting BTC is not yet near its peak for this market cycle. BTC is currently seen as uncharted, with futures traders becoming more careful. In the past weeks, short liquidations did not happen with their usual frequency, due to expectations for significant price spikes and improved risk strategies.
Smart Money Buying Continues
Almost daily, there are news of new buyers choosing to put a part of their treasury in BTC. Corporate buying is now an indicator of both support and expectations of higher valuations.
Corporate buying also suggests BTC is even more in-demand and useful at high prices, both as treasury assurances and as a tool to transfer large sums. The BTC network has shown it can carry transactions worth above $1B with no lag and a relatively small cost.
While corporate buyers are “whales”, their holdings are relatively small in comparison to the wallets of most leading exchanges. For BTC, retail and small holders remain an important source of price action.
BTC May Compete with Traditional Markets
At a $1 trillion valuation, one of the big milestones for BTC is to reach $75,000. Despite expectations for much higher prices in the long term, those milestones are additional evidence of the significance and acceptance of BTC as a financial instrument.
BTC for now is far from the valuation of the gold market, but may soon reach the valuation of the world’s silver.
Korean Premium Remains High
The so-called “kimchi premium” for BTC remains high. The asset trades above $66,000 on Huobi, as the exchange is isolated from international traders. Historically, Korean prices have moved ahead of other markets, due to the impossibility for arbitrage.
In the past, the Korean trading premium has led the market during its most bullish runs. In late 2017, the Korean market reached the peak first, going above $20,000.
BTC has backtracked somewhat to the highly active Ethereum (ETH) and smaller altcoins. As prices for the leading coin stabilize, investors flock to more active assets, which are riskier, but still promise higher upside moves and surprise gains. This trend lowered the BTC market cap dominance to about 55%, from previous peaks above 60%.
The BTC trading profile is still determined by volumes against Tether (USDT). The share of the US dollar, however, is significant, reflecting the trading pairs on Coinbase and Coinbase Pro, as well as the increasing interest of US retail buyers. The Euro has also shown a significant share of BTC buying, even displacing the Japanese Yen. Currently, Japanese BTC trading is subdued in comparison to past periods of euphoria, and the share of the JPY/BTC pair is just about 3.9% of all market activity.
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