This Bitcoin Trend Happened Only Twice & Indicates We are Still in the Early Phase of a Bull Market
- Bitcoin is back at near $12,000 level as we trade around $11,700.
The largest cryptocurrency took a drop under $11,300 yesterday only to make its way back to $11,850, which has been attributed to Dave Portnoy of Barstool Sports, educating his 1.7 million Twitter followers about Bitcoin in which he is already in seven figures deep.
Trader DonAlt, however, is not “positioned for huge upside,” and emphasizes on “sub $11k for any significant bearishness.” He said,
“Support held & made the price bounce back to the last resistance again. Going to watch how this Portnoy action into that resistance plays out, bulls are looking for a close above in the next few days.”
— Jonny Moe (@JonnyMoeTrades) August 14, 2020
For Bitcoin, maximum pain appears to be around $11,500 as the digital asset continues to hover around this level ever since BTC broke above $11,000 in the last week of July.
The good thing for bitcoin meanwhile is the BTC balance on cryptocurrency exchanges, which continues to slide down. Ever since the March sell-off, the price of the crypto asset has been going up while exchanges' BTC balance has been “declining extensively,” a trend last seen in 2016.
This means while investors are holding instead of taking profits, they are ready to buy any dips with the rapidly rising stablecoin supply.
“Historically, this happened twice & it's an indication that we're still in the early phase of a bull market,” said trader Crypto squeeze. “The big players aren't ready to unload at this price.”
Dollar’s Loss is Bitcoin’s Gain
While bitcoin has been uptrending, all this time, the US dollar has been declining. It was in March during the market-wide correction that the USD gained strength — DXY went from 95 to 102, last seen in late 2016.
However, since then, the significant trend has been towards the south. Just recently, the US dollar index hit over a two-year low. Currently, it is slightly better at around 93 amidst the impasse in Congress about the additional stimulus to cope with the coronavirus pandemic.
“The dollar being weaker is a sign of positive risk sentiment,” said Klarity’s Sahota. “The market is moving to places that would give them a better return.”
The better-than-expected US jobless claims data, claims for state unemployment benefits were 963,000 for the week ended August 8, isn’t helping the dollar either. But the dollar's loss is undoubtedly bitcoin’s gain.
Not only the losing faith in fiat currency aids in the adoption of the digital asset, which is in limited supply and is censorship-resistant, but it also means BTC price moves up. Trader and economist Alex Kruger said,
“The dollar is green like a leaf. Leaves grow old, fall, and die. Bitcoin is weightless and immortal. Dollar falls, Bitcoin remains. That is why BTC/USD goes up. Simple logic.”