A Catastrophic Dump Might Not be Coming to Bitcoin, But Smaller Whipsaws Are Still on the Radar
Bitcoin has started the week on a positive note.
The world’s leading digital currency first started moving over the weekend, going to $10,600 but only to come back down to around $10,200. On Monday, BTC went even higher to above $10,800.
At the time of writing, BTC/USD has been trading at $$10,860 in green by almost 4% and managing $1.87 billion in real volume.
The digital asset has been performing well in line with other markets. Even gold jumped this week to $1,970 with the US dollar index around 93 and testing various levels of support across different asset classes.
The dollar is getting a smack down this morning. My pocket rockets are doing some damage yeehaw! pic.twitter.com/UPKzp1aa3a
— Arthur Hayes (@CryptoHayes) September 15, 2020
The stock markets also climbed following its worst week since March. S&P 500 went to 3,400 only to end the day with a slight move down. But according to Sam Stovall, CFRA chief investment strategist, investors should be prepared for additional pressure to a “double-digital correction” but said this is an “opportunity to buy rather than reason to bail.”
Given bitcoin’s short-term correlation with the equity market, losses could be in for the cryptocurrency as well, but on-chain analyst Willy Woo said it is “very unlikely we'll see any kind of a catastrophic dump in price from here.”
He shared how another impulse of coins changing hands has been completed, which means over the next coming weeks, the next directional move is likely upwards.
This Is A Buy The Dip Scenario
In the mid macro, that is in the coming months, “we're in a really nice zone of Difficulty Ribbon compression, post halvening,” which is a reliable indicator of bullishness.
Actually, historically, BTC tends to form a new range above a previous post-halving range, which this time is between higher $9k – $10k, which is “exactly what BTC needs for a strong next leg up,” said analyst Rekt Capital.
Meanwhile, as per the RVT ratio, Realised Value to Transaction Volume ratio, there is a lot of room for growth.
And moving to the full macro picture here's RVT Ratio (very generally you can think of it as a PE Ratio for Bitcoin, a better version of my older NVT Ratio). Obviously we have a lot of room for growth in this cycle. pic.twitter.com/YCR2XwJdZS
— Willy Woo (@woonomic) September 14, 2020
But it doesn’t mean the pullback won’t come at all. Woo is still cautious of another short term dump to fill the CME gap, which for now is front run by liquidity and is “strongly bullish if we break resistance here.”
A lot of bids are also on the spot, waiting to snap up the gap in the mid-high $9,000s. As such, overall, a mega correction is not expected, but the chances of smaller whipsaws are present in the short term with resistance teetering.
$BTC OBV at an important decision level. At the mid channel resistance. While it has been looking strong it would need to break and close above this for me to continue to be bullish. Otherwise I expect a pullback and more chop before going back up. pic.twitter.com/MefHldBPbw
— IncomeSharks (@IncomeSharks) September 14, 2020
“There's plenty of buy support below 10k, this is a buy the dip scenario,” said Woo.
And this is exactly what whales are doing, as the number of entities with a balance of more than 1k BTC continues to increase, this upward trend hasn’t been broken throughout 2020.