Bitcoin: How can market participants navigate this 'higher highs' phase


After consolidating within the $46k-$49k bracket over the previous week, Bitcoin’s worth lastly broke above $50,000 not too long ago. Now, the king coin’s worth motion has undoubtedly given the bulls a motive to rejoice. Nonetheless, ought to merchants and traders be celebrating too early? Properly, till the development confirms itself, it’s best to stay additional cautious.

Are we a useless cat bounce? 

The aforementioned restoration has evidently stirred a fair proportion of optimism amongst market contributors. Nonetheless, at this stage, it must be famous that Bitcoin remains to be beneath its $51k resistance stage. What’s extra, on reflection, a handful of critics have advised that the continued surge is merely a useless cat bounce.

BTC/USDT || Supply: TradingView

A useless cat bounce is taken into account to be a continuation sample. Right here, at first, the bounce might look like a reversal of the prevailing development however it’s shortly adopted by a continuation of the downward worth motion. Proper now, nevertheless, the percentages of such a scenario unfolding look pretty unlikely, primarily due to a few causes.

One, Bitcoin has been buying and selling above all its shifting averages, proper from the 20 and 50-day to the 100 and 200-day. This moderately tasks a bullish affirmation. Normally, a retracement from these ranges invalidates the optimistic narrative and paves the way in which to hikes turning into useless cat bounces.

Additional, the present state of a bunch of different indicators too supported the identical narrative.

So, is the market heading in direction of one other high?  

Briefly, sure. Properly, each bull run so far has concluded with the 2-year shifting common multiplier remaining above or no less than touching the crimson line. That being mentioned, it must also be famous that the identical has sometimes hovered mid-way through the nascent section of any bull run. In the intervening time, the multiplier is someplace in between and is inching in direction of the identical threshold.

Ergo, protecting in thoughts the constant northbound motion of the multiplier, it may be projected that the prevailing worth hike is unlikely to be short-term.

Supply: LookIntoBitcoin

Curiously, BTC’s worth on the rainbow log chart has by no means stepped into the promote zone even as soon as throughout this cycle. As will be noticed from the chart beneath, it did throughout most different cycles. Nonetheless, it’s price noting that the value has already taken a step from the ‘low-cost’ to ‘HODL’ zone and is on the verge of breaking into the ‘bubble’ zone.

Each time an analogous situation has unfolded prior to now, BTC’s worth has made it to the crimson zone. Therefore, anticipating one thing related this time round too is smart.

Additional, the web unrealized revenue and loss is one other key indicator that helps in affirming the route of any ongoing development. As will be seen from the chart hooked up, all of the earlier market tops have been marked with a cross into the ‘euphoria’ zone. So far as the present state of this indicator is worried, the NUPL has stepped into the greed zone already from the denial/optimism zone. Actually, it’s heading in direction of the highest.

This projection too, by and enormous, highlights that Bitcoin’s worth is heading in direction of a brand new high and would improbably hand over earlier than that.

Supply: LookIntoBitcoin

Conclusion

Bitcoin has been round for a very long time. Drawing conclusions from its historic information have, most of the time, hit the nail on the pinnacle. Nonetheless, the market can find yourself appearing irrationally as per its personal whims and fancies.

It, due to this fact, is crucial for market contributors to guage entry-exit factors and have an escape plan prepared. Wanting on the approach issues have performed out prior to now, this bullish section is prone to keep till November.





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