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What does Bitcoin need to breach $41,000 again?

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Bitcoin has been in the news a lot lately, mostly due to its exponential price performance over the past few weeks. However, at the time of writing, BTC was trading at a level that was nearly 8% lower than its ATH of $41,941, based on data from CoinMarketCap.

While BTC has repeatedly attempted to breach the $40,000-level, these attempts have either been brief or unsuccessful. It would therefore seem that the increasing active supply on exchanges has posed a challenge to Bitcoin’s price rally.

While some HODLers and retail traders are selling, many other retail traders and institutions who bought Bitcoin above the $30,000-level have accumulated and instead, may be protecting the asset from a cascading sell-off. As Bitcoin continues to leave exchanges and hit wallets or reserves, there is a possibility that reserves may continue to drop till they hit December 2020 levels. 

Is Bitcoin heading to $41000?

Bitcoin’s Price Chart || Source: Coingecko

Based on the attached chart, the cryptocurrency’s price has ranged between the $37,000 and $40,000-level for the past 24 hours. While there is enough volatility, despite the increasing volume, Bitcoin’s price hasn’t sustained itself above the $40000-level for over a few hours. The rebound is a signal of the positive sentiment in the market, but based on data from Skew charts, Bitcoin is rebounding toward $40,000 backed by relatively low volumes. 

Is Bitcoin heading to $41000?

Aggregate Hourly Volume || Source: Skew

A drop in spot exchange reserves and an increase in the trade volume suggest that the sentiment is positive on spot exchanges. In addition to the activity on spot exchanges, there has been a sharp movement in the Options market.

Skew charts highlight that short-dated calls in Bitcoin are in high demand right now. In fact, on a top derivatives exchange like the CME, nearly 35,000 calls were traded earlier this week, a level which was already above breakeven with Bitcoin trading $38,600.

Further, volatility in price has risen, with the same inching closer to its 2017-level, supporting further price discovery above $40,000. 

On Crypto-Twitter, many on-chain analysts have predicted drops and corrections in the price rally ever since price discovery started beyond the $35,000-level. However, after a few drops in volatility and momentum, institutional buying has notably supported the price rally and with increasing non-zero Bitcoin addresses, there is a change in sentiment among retail buyers as well.

If the buying continues through the weekend, there is a high probability of pursuing the rally to $41,000 in the coming week.

Source: Coinstats 


Ekta is a full-time journalist at AMBCrypto and her specialization lies in spot markets. Currently pursuing her MBA, she is passionate about trading, fintech, and everything decentralized.
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