Bitcoin made a huge move, opening this week with some decent gains but it was rejected just above $40K. Right around that resistance, bears started to pull the price down but bulls are still pushing in as BTC traded at $39.73K at press time, highlighting daily gains of 6.74%.
This week began with an exciting start as Bitcoin’s price soared up like a rollercoaster ride fuelled by speculations of Amazon accepting BTC and corresponding denial to the same. Nonetheless, amid the Tether FUD which was later debunked, and the rekting of leveraged traders, Bitcoin maintained its upward trajectory.
A timeline of the news event with the price movement; Source: Santiment
An explosive move ahead?
A previous article pointed out how Bitcoin’s Relative Strength Index, breaking away with a massive uptick from its continued downward trajectory for the first time this year, was a major sign of bullishness for the asset. Another strong indicator that points towards an ‘explosive upward price momentum’ was the Bollinger bands.
Trader and analyst, Scott Melker, in a recent video highlighted that around December 2020, Bollinger Bands were tight, then in April 21 bands had constricted again. Interestingly, through this entire month, bands were really tight; previously when this happened in December (2020) and April (2021) it ‘led to a volatile explosive move’ shown by BTC’s price. Melker further called this tightening and recent opening up of bands a ‘very bullish thing.’
Bollinger Bands on BTC’s daily chart; Source: Scott Melker Youtube
What about the bearish signs, though?
External news has always been one of the main driving factors in the case of Bitcoin’s price and sentiment. Mostly whenever the price is up social sentiment generally stays up too. However, this time amid the Amazon rumor, BTC’s Twitter-weighted sentiment rapidly turned positive but ended up crashing to its lowest levels in 6 months once Amazon denied the rumors. The same case was seen for the total weighted sentiment of Bitcoin which, too, was seen declining.
Source: Sanbase
That being said, a report pointed out that the predicted funding rate is neutral or negative at the moment, meaning most people are short. Does this mean that the recent Bitcoin price action was not enough to set a reversal?
Source: Funding rate – Bybt
It’ll be fair to say that for seeing a true reversal we need a continuation towards breaking the $40K resistance and further testing of the $42K mark which will help decipher a better long-term picture for the coin. While Twitter sentiment and funding rate present that a majority of players are still bearish on Bitcoin, upward price action may turn that positive.
