Bearish Narratives Still in Play for Bitcoin Amidst the Bullish Signs
- Crypto exchange see record volume and signups, indicating retail investors buying the dip and open interest on perpetual swaps showing recovery
- Meanwhile, the bearish pressure is also there in the form of the stock market not bottomed yet, PlusToken and Mt. Gox trustee potential sell-off
For about a fortnight now, the price of Bitcoin is keeping above $6,000 for the most part. In 2018, the same day Bitcoin was trading around $6,800, near the same level we are currently at $6,350.
Interestingly, S&P 500 that went to its all-time high this year is trading at 2626 close to it's 2018’s 2640 figure.
With “1 dollar = 1 dollar. All clearly very stable,” said economist and trader Alex Kruger.
Amidst this, the analyst with the Twitter handle Income Sharks said, we are in a bull run, for sure and it’s all just buy the dip opportunity. The analyst said,
“BTC supertrend on the daily still showing we are in a confirmed bull run. Until we get a short signal again I'm in buy the dip mode. People had a chance to buy sub 4k, sub 5k, and now sub 6k. Next round of fomo buying might happen near 7k.”
Also, the bitcoin price crash saw the exchanges recording a considerable increase in trading volume and signups. While on Coinbase, the new user signups were 2x to last 12-month averages, Kraken reported an 83% increase and BitBank saw 40% jump in weekly account registration. Kraken CEO Jesse Powell said,
“Everyday, [we’re seeing] more sign-ups, more verification requests, more people funding their accounts, and that to us is a signal that things are heating up.”
This means retail investors are actually buying the dip. Also, open interest on perpetual swaps is starting to show signs of recovery as the dollar amount of contracts outstanding is yet again above $1 billion after falling in the range of $800 million from March 12 to March 27, as per IntoTheBlock.
However, amidst this positive news, there are several bearish factors still gripping the bitcoin market. For starters, Bitcoin is looking to end the quarter first of 2020 10% down, making a hattrick after recording 10.30% and 25.11% losses in the 4Q19 and 3Q19 respectively.
As we reported, the world's leading digital asset is acting like a risk-on asset, following the stock market and in the expected backdrop of unemployment projected by Goldman Sachs economists to soar 15% by mid-year and GDP to plunge 34%, its analysts continue to be concerned that “the U.S. equity market hasn’t found a bottom yet.”
Goldman Sachs' analysts point out that the market low didn’t occur until March 2009 in the last financial crisis and “bear markets are often punctuated by sharp bounces before resuming their downward trajectory.” So, until bitcoin decouples from the stock market, the digital asset could also drop lower.
Besides mirroring the stock market, analyst Jacob Canfield points out how miners hoarding may create sell pressure on the price when they start to sell, especially now that the cost of mining BTC is more than its market price.
The $3 billion Ponzi scheme PlusToken is another hurdle in front of BTC price. Earlier this month, they dumped 13,000 BTC on the market and can do so again.
Another bearish narrative in play now is Mt. Gox Trustee that is “back to sell some more” after the court-order submission deadline for the defunct bitcoin exchange’s civil rehabilitation plan got extended to July 1, 2020.