- Now that the major technical resistance for Bitcoin at US$45,300 has been convincingly breached, the cryptocurrency has been taking a breather, as investors who bought near last November’s all-time-high look to recover some of their losses and swear off the asset class entirely.
- Some traders believe that earlier selloffs in Bitcoin were overdone, and that those who saw little in the technology of the cryptocurrency or its value proposition, have all but been shaken out.
So you sat on the sidelines last November as Bitcoin pumped to an all-time-high, then dismissed it as an asset class as it fell by almost half earlier this year and now that the animal spirits in the benchmark cryptocurrency are stirring again, you’re wondering if it’s time to get in.
Almost every newbie investor to Bitcoin specifically or cryptocurrencies in general would have gone through the same thought process, trying to time their entry into the nascent asset class and being swept up by conflicting narratives.
Many who understand the value and technology of Bitcoin have never sold a single token in their lives, and live relatively simply (no Lambos here).
Whereas abject speculators who are chasing the next high, simply buy the dips and sell the rallies (plenty of Lambos here).
Now that the major technical resistance for Bitcoin at US$45,300 has been convincingly breached, the cryptocurrency has been taking a breather, as investors who bought near last November’s all-time-high look to recover some of their losses and swear off the asset class entirely.
Meanwhile, dip buyers have been bidding up Bitcoin, but not so much that it has set off a rally towards the next resistance, US$52,000.
To be fair, Bitcoin has risen by around a fifth since mid-March, wiping out all of this year’s losses and accumulating gains of around 2%.
That rally has since slowed, ironically at a time when equities, which Bitcoin shares a strong correlation with, are rallying on the prospect of a ceasefire in Ukraine.
Nevertheless, Bitcoin bulls remain, well, bullish, on the prospect of the benchmark cryptocurrency, with long-term Bitcoin maximalist MicroStrategy taking out more debt to buy more Bitcoin.
Some traders believe that earlier selloffs in Bitcoin were overdone, and that those who saw little in the technology of the cryptocurrency or its value proposition, have all but been shaken out.
Since Monday, over US$230 million worth of short positions (bets that Bitcoin’s price would fall) were liquidated, according to data from Coinglass, as Bitcoin moved briefly over US$48,000.
And what Bitcoin is being purchased, looks like it might be intended for more long term holding – with spot volume rising faster than futures volume, an important development as spot holders of Bitcoin are less likely to be short-term traders and could portend higher prices.
The amount of Bitcoin on centralized exchanges has fallen from 2.556 million to 2.499 million since March 10, according to data from Glassnode – typically having more Bitcoin on-exchange is an indication that traders have an intention to sell and having less suggests they are looking to hold.
Glassnode data also reveals that the amount of dollar-based stablecoins sitting on centralized exchanges has gone up sharply between January and February – the dry powder needed to set off another cryptocurrency rally.
