Bitcoin (BTC) was priced above $ 40,000 for the first time in 23 days on Feb.6. But this time around, with a less overheated derivatives market, market sentiment is much calmer.
The combination of a less crowded Bitcoin futures market, selling pressure from peaking whales, and a quick rebound could help BTC stabilize above $ 40,000 this time around.
Bitcoin is quickly recovering after the whales stop selling
On January 29, a pseudonymous Bitcoin researcher and analyst named “Material Scientist” said the flow of orders for “megawales” had reached an all-time high.
This means that selling pressures from whales filling orders valued at $ 1 million to $ 10 million hit a record high. The analyst said at the time:
“Whales have bought back almost everything they had sold in $ 40,000, and Mega Whales are on the verge of creating a new ATH for their order flow. The downtrend is over, IMO. New ATH soon, don’t miss it! “Bitcoin exchanges data with whale orders (brown line). Source: material indicators
If the price of Bitcoin sets $ 40,000 as the new support area, it would create an extremely positive short-term price trend for BTC.
This would mean that BTC can now move to its all-time high without the massive selling pressure from big whales and wealthy investors.
In the short term, to maintain its bullish structure, Bitcoin would need to protect two key levels of support: $ 40,000 and $ 37,834.
According to analysts at Whalemap, a data analytics platform that gathers forest data, there is a confluence of whale support at $ 37,834 and $ 36,290.
If Bitcoin collapses from $ 40,000, these two areas of support will be vital to defense. Below these two levels there would likely be a short-term bearish trend. The analysts wrote:
“Confluence of whale support at $ 37,834 -> $ 36,290. A new cluster was formed yesterday in this area as well. This should give BTC a good base to take off from if we ever get there. Otherwise, $ 39,843 should also help. “Support levels for whale clusters. Source: Whalemap
What’s next?
In the foreseeable future, some traders expect Bitcoin to rise above $ 60,000 with the momentum of the ongoing rally.
Scott Melker, a cryptocurrency trader, said there would be pullbacks, but Bitcoin would likely hit $ 63,000 after the breakout. He said:
“There will be retreats, maybe even to retest the tip of the flag as support. But technically, this is a confirmed breakout that should bring $ BTC to 63,000 at some point. Disclaimer – Patterns rarely achieve their goals, but the rules are the rules. “
Bitcoin technically broke the bull flag when it topped $ 38,000 on February 4. Given that Bitcoin looks stronger than the last time it broke $ 40,000 a month ago, there’s enough momentum to carry it past $ 50,000 this time.
A potential catalyst in the near future could be that Guggenheim may confirm its investment in Bitcoin after securing rights to invest in the Grayscale Bitcoin Trust in February.
