- The Bitcoin price has breached the strong resistance at USD 7,000 after three attempts in April.
- However, the increasingly bullish mood on the Bitcoin market is not only unstable due to the corona virus, but other reasons also pose a threat.
Last week the Bitcoin price faced strong resistance at the USD 7,000 mark. Since the beginning of April, BTC has already risen above the 7,000 USD level three times on the 1-hour chart, but has never been able to hold its gains. After Bitcoin traded in a very tight range between $6,700 and $6,900 over the weekend, the bulls are currently trying to take control. At the time of writing this has been successful. Bitcoin rose from 6,850 USD to 7,112 USD within 3 hours.
Reasons for muted optimism
However, technical analysts remain hesitant about the current situation in the crypto market. As the well-known analyst Josh Rager told his nearly 70,000 followers on Twitter, whales currently seem to be playing “liquidation games”. Yesterday, Sunday, BTC experienced a sudden setback to a low of $6,650, followed by an immediate recovery to $6,900. As Rager speculates, whales may be trying to scare up traders with high leverage.
Nonetheless, as Willy Woo explained, the mood in the crypto market is rather bullish. According to Woo, two fundamentals suggest that the market will follow another uptrend. According to Woo, the way Bitcoin’s mining economy is developing indicates that the market bottomed out in March.
On the one hand, Woo describes that the hash ribbons have recovered (assuming there is no lower low), which is a reliable “low” signal. The last time the hash ribbons looked similar was in December 2019, when BTC hit a low of $6,400, and in December 2018, when BTC hit a low of $3,150.
Second, Woo cites the “Miners Energy Ratio,” which measures the relationship between Bitcoin’s market capitalization and its energy consumption. As Woo notes, this metric has entered a strong buying zone. The last time this ratio entered this “extreme buy zone” was months before the last halving in 2016, before Bitcoin started its rally to $20,000 dollars with an increase of over 4,000 %.
The search volume for Bitcoin also remains a bullish signal. As CNF reported, the search volume has risen sharply since the crash on March 12th. ARK Invest analyst Yassine Elmandjra noted in a recent tweet that especially in emerging markets such as Peru, Guatemala, Gambia, Uruguay, Kenya, Nigeria, and Burkina Faso, the “relative Google search interest” for the term “Bitcoin” is approaching an all-time high.
However, despite these positive fundamentals, there are still bearish perceptions, as Jacob Canfield noted. Possible sales by the Mt. Gox trustee and the PlusToken scammer, who still own a considerable amount of Bitcoin and Ethereum, could quickly tilt the increasingly bullish sentiment.