Despite some recent volatility that brought Bitcoin as low as $9,700 just hours ago, this weekend saw the price of the leading cryptocurrency pass above $10,000 for the first time in months.
This achievement wasn’t easy; prices were stuck under the key psychological price point for days on end. But eventually, on Saturday night, bulls pressed through, bringing Bitcoin as high as $10,200.
Despite the bull trend since subsiding as aforementioned, analysts remain convinced the cryptocurrency has more upside in store, citing technical factors and a seemingly strong fundamental trend for Bitcoin.
Bitcoin’s $10,000 Breakout Confirms Bull Trend, Analysts Say
In the wake of the breakout past $10,000, Willy Woo — partner at cryptocurrency hedge fund Adaptive Capital — shared his thoughts on the recent price action, writing the following:
This breakout is the real deal. Fundamental investment activity is backing this $10k breakout.
This breakout is the real deal. Fundamental investment activity is backing this $10k breakout. pic.twitter.com/IDWmhXX2Mj
— Willy Woo (@woonomic) February 9, 2020
He made this comment in reference to the chart seen above, in which Woo shows investor velocity data in relation to prices. The prominent on-chain analyst added that the underlying trends are “mega bullish,” suggesting Bitcoin’s rally to $10,000 is just the start of something even greater.
Indeed, in a recent newsletter, noted cryptocurrency trader Filb Filb drew attention to the $9,550 level for Bitcoin by posting the below chart, which shows that this price point has always been an inflection point for the market.
More specifically, when prices passed above $9,550, the leading crypto asset gained even more strength, and when prices failed to break this level, rallies quickly turned into bearish reversals.
With Bitcoin closing the weekly candle above $9,550 just on Sunday, the price could be cleared for a surge towards $11,500 “quickly,” which would represent an over 15% rally from the current price level of $9,900.
This call for $11,500 has been echoed by Dave the Wave — the trader who in the middle of 2019 called that Bitcoin would bottom around $6,400. This pseudonymous commentator recently remarked BTC is trading in a “mini-mini parabola” set to take prices to $11,500 by the end of the month.
On the fundamental side of things, there are emerging factors that will help drive demand for Bitcoin. Fundstrat’s co-founder Thomas Lee recently identified two of those things, writing in the below tweet tailwinds that could boost BTC:
- The block reward reduction, also known as the “halving” or “halvening.” This event will decrease Bitcoin’s inflation by 50%, which should mean that steady or increased demand, coupled with the slower output of new BTC, will help force prices higher over time. This event is slated to take place in early May.
- The growth of crypto companies bringing fiat into the market could help push Bitcoin higher. These companies include Fidelity Investments, Bakkt, and others working mainly with institutional players.
Good sign that #bitcoin is up 40% in the first months of 2020
— Thomas Lee (@fundstrat) February 9, 2020
Some Analysts Are Signaling Caution
Although there are all these factors suggesting upside is imminent, some are signaling caution, especially after the strong over 50% run Bitcoin has seen over the past 50 days.
According to a recent analysis shared by economist and crypto analyst Alex Krüger, Bitcoin printing a funding rate of above 0.12% (equates to a crazy 131% when annualized) has historically been a precursor to relatively large drops. More specifically, every time the aforementioned funding rate was seen, Bitcoin dropped an average of 7% in the five days that followed.
A rate of 0.12% was seen late last week, meaning a drop could be sustained in the coming days.
Not to mention, Thomas Thorntown of Hedge Fund Telemetry recently pointed out that the Demark Sequential Countdown indicator, which called Bitcoin’s $6,400 bottom, is printing a potential sell candle, meaning investors should be cautious.
#BITCOIN update. Recommending selling long today and go neutral. Maybe a little early with pending DeMark Sequential Countdown 13. Up 52% from buy recommendation in December when there were DeMark buy Countdown 13's cc @DTAPCAP @RaoulGMI @MarkYusko @APompliano pic.twitter.com/m0D9wpjOSm
— Thomas Thornton (@TommyThornton) February 7, 2020