Here’s Why Bitcoin’s Next Big Move is Likely to be Down

Last night bitcoin yet again dropped below $9,000 to $8,989. Since the beginning of this week, BTC has lost 6% of its value.

Currently, we are hovering around $9,250 while managing $2 billion in ‘real’ volume.

Despite this price action, the long-term view of bitcoin remains as bullish as ever as analyst Cole Garner said, “I am massively bullish on Bitcoin.”

But in the short term, pain could be ahead as “the next big move is likely down,” he said.

This is because of several factors that point that odds are currently in favor of bears. To start with, as we shared, miners are moving vast amounts of bitcoin, which hasn’t been seen this year.

Some mining pools moved millions worth of bitcoin through over-the-counter (OTC) trading desks while about 2,650 BTC — the most substantial flow of bitcoin from miners to exchanges in over a year — are sent to Bitfinex crypto exchange.

This doesn’t speak well for BTC price.

Moreover, on the same exchange, the whale buy wall is eroding and hasn’t been replenished yet.

What’s more, is the order book of the exchange is skewed massively to the sell-side for almost six weeks, which the analyst said has been an “accurate leading indicator of bitcoin’s next move nearly every swing for the past nine months.”

Adding to this selling pressure is the CME traders who are “massively net short BTC and have been for many weeks.” Institutions have been this net short once before when bitcoin was hovering around the same price level in February 2020.

A dip before the roaring bull market

Technically, the analyst says we are still in a “bull market territory” and a break below the volume-weighted average price (VWAP) — the average price an asset has traded at throughout the day, based on both volume and price — is a “juicy” buy the dip opportunity.

“Could be the last BTFD below $10k. Ever,” he said, which, to point out, bitcoin has never let work in anyone’s favor.

So, where to next?

Market traders and analysts have different targets, with the majority of them seeing the world’s leading digital currency going down to at least $8,000 level and some even around $7k.

Given Bitcoin’s still elevated correlation with the S&P 500, just yesterday in another bout of volatility stocks commodities and crypto all were sharply lower over the rising coronavirus cases; it also depends on how well global markets hold up.

“I suspect we’ll see a drop to the $7800-$8200 area. Outside chance, it goes as low as the mid-$6k range. I don’t expect it to go lower,” Garner said. If bitcoin breaks down, altcoins can crash, but still, all-time highs are expected by the end of the year, he said.

The bullish factors are present in the form of active addresses that have reached 900,000 not seen since the 2017 bull run. Also, we’re very close, mere weeks to a hash ribbon buy signal.

This is in the short term as in the big picture, a “roaring bull market” is expected to be right around the corner.

7 Bullish Ethereum Charts that says Ether is “Significantly Undervalued”

The price of Ether might still be struggling around $200 but its fundamentals are screaming bullish. Post Black Thursday sell off, Ether has been seeing a net outflow (62% of days) from exchanges, which is a sign of accumulation.

Blockfyre charted several progress indicators for Ethereum against its price development since its genesis and the growth had them stating, “Ethereum is significantly undervalued at current prices.”

The first metric is development activity which indicates the health of the network that has been constantly increasing since 2014. Regardless of the price movement, the Ethereum foundation and its developers have been hard at work.

As we reported, the Ethereum usage is at its all-time high with the amount of gas used continuing to surge. Gas usage indicates the growing adoption of the Ethereum network.

“More than 60 billion gas is now being used on a daily basis — a sign that Ethereum blockspace demand has never been higher,” pointed out Spencer Noon, head of Digital Currency Group.

Interestingly, the increased usage of the network also caused the gas price to jump 300% since the end of April at 40 Gwei. On May 21st, it went up as high as 50 Gwei and is currently averaging around 37 Gwei.

The number of addresses holding Ether has just hit a new peak at 40 million, up 350% since early 2018.

The total daily active addresses are also at 380k, a figure not seen in over two years.

The mean dollar invested age that measures how long the Ether has stayed in an address before being moved has also been increasing since 2018. Recently, this metric also hit a new all-time high which shows investors accumulating and holding their Ether at these price levels.

What’s even more interesting is that the same accumulation behavior is seen in miners.

Ether miners’ balance is in an uptrend since its creation indicating even miners who are required to sell their ETH rewards to cover their expenses are preferring to hold their coins.

DeFi is already growing like crazy, now its users are starting to go parabolic. Currently, there are 178k DeFi users which is up from 90k five months ago.

Also, seven of the DeFi projects have more than $30 million assets under management (AUM) while a year ago there was only one such project.

The system is maturing rapidly and now becoming an “economic vacuum for all assets,” starting with Bitcoin as since May 1st, DeFi project WBTC has minted $25 million.

In 2020, while the world went into chaos, Ethereum averaged 850k transactions per day, which is up from 580k in early January. This is three times more than bitcoin averages on a daily basis.

Also, ETH fees have totaled at $426k in the past 24 hours, which is more than 237x than the third largest cryptocurrency XRP. As of May 18, 2020, Ethereum fee based ‘revenues’ have totaled more than $15 million in 2020.

Moreover, “Ethereum is the only network besides Bitcoin that has a meaningful market for security paid in fees.”

But the most prominent growth has been seen in stablecoins, with more than $7 billion in fiat-backed tokens now issued on Ethereum. Over the past three months, a major demand for crypto dollars was seen in about $4 billion in new issuance.

Adding to this bullishness is the 1 million new shares of Grayscale Investments ETHE product that has been issued in the past 3 weeks, noted Noon. This is a sign that institutions are showing an interest in ETH, he said.

All of this progress while Ether price is at two-year low are “very promising” for Ethereum Network and the prices.

Bitcoin Market Outlook: A Long Game Looking Bearish in the Short Term

Last week, the price of bitcoin dropped below $9,000 and has been trading under $9,300 throughout the week.

On the weekend, we yet again dropped below $9,000 to $8,630, down 4% while managing $1.94 billion in “real” trading volume.

This dump was reportedly initiated on crypto exchange Coinbase, as per Coin Metrics.

According to Charlie Morris, bitcoin is not looking happy, and “now we have to wait for the tourists to dump. Then we can return to the serious DEMAND conversation.”

The market continues to see pullbacks, unable to surpass the important $10,000 level despite the BTC balance on exchanges approaching the lowest levels in more than a year.

It gets started after the market crashed in March and since then the exchange balances continue to drop. This trend is completely opposite of what the market experienced a year ago when the BTC balance on exchanges grew rapidly along with the price.

This could be more investors turning to hodling their BTC, moving their funds to cold storage, and/or controlling the keys themselves — following the ‘not your keys, not your coins’ narrative.

However, according to Arcane Research, a “more likely explanation could be growing activity in the OTC market, moving funds of exchanges.”

$7,500 a possibility

Now, if we fail to retake $9,200, Bitcoin can go below $8,800 and any HTF close here would mean $7,800 is likely to be the next. “Lose that, and I will have to be open to a much larger correction across the board,” said trader Crypto Credible.

However, he is still “only interested in longs” as his line in the sand remains 7,800-$8,000.

This is unlike trader BitDealer’s view to whom bitcoin is not looking good and until we make a higher high, he is more interested in shorting the highs.

For trader Altcoin Psycho, this drop in price means $7,500 “looks like a possibility.” Although we have some support on the daily chart if BTC breaches, weekly support is looking weak.

“Bulls need to step in asap or we’re going down hard,” he said.

But this is all short-term, in the long-term the picture is looking as good as it always has been with Paul Tudor Jones a “legend trend follower” entering the bitcoin and Goldman hosting a call with Bitcoin which is “in the same title as Gold is significant,” as per Cantering Clark.

Professional Money Managers Loading Up on Bitcoin Post Halving

After making yet another attempt towards $10,000, Bitcoin failed to take over this important level and is currently trading under $9,500.

Interestingly, the world’s leading cryptocurrency is challenging the downtrend experienced after the 2017 bull run.

But this time a lot of factors are in bitcoin’s favor. For starters, bitcoin looks to be decoupled from the stock market.

Also, this week, the 7-day average “real” trading volume pushed to the highest levels of 2020. This week followed last week’s volatile but solid volume.

The last time bitcoin price was at this level was in July 2019, when the BTC price peaked at $13,900.

CME Captures Market Share

This week, the regulated market CME really shone as well. Over the last month, CME bitcoin futures saw significant growth in terms of open interest. Prior to the March crash, CME accounted for 4%-8% of all the open interest in the bitcoin futures market.

But this crash made a visible trend shift that has CME gaining the market share as it now accounts for 15% of OI. Arcane Research noted,

“This growth may indicate that professional money managers have loaded up on bitcoin following the market crash, seeking to allocate cash into a provably scarce asset class.”

Excluding Paul Tudor Jones’ $75 million worth of OI on CME bitcoin futures, still $400 million is held by other investors.

However, open interest in OKEx bitcoin futures has dropped which means traders are taking profits on their positions. As we reported, the bitcoin options market has surged to an all-time high this week.

Deribit remains the biggest player in the options market with its OI steadily fluctuating between 80% to 90% of the total market. CME that used to play a minor role now accounts for about 1-2% of total OI after recording over an 11% increase on Thursday.

Fast and strong growth

When it comes to the Bitcoin network, the 40% crash in bitcoin hash rate in the days following the halving that reduced mining profitability to half had some miners moving back to bitcoin forks.

Meanwhile, Network Value to Transaction ratio indicated bitcoin price might be about to enter a period of “fast and strong growth.”

Source: ArcaneResearch

NVT ratio measures the BTC price relative to the value transferred over the network. Over the past three years, the ratio exceeding 10 could indicate a fast and strong pace growth as seen in 2017, 2019, and 2020 and above 12, it could be a local top.

Also, network traffic must increase for the price to continue rising and in USD terms, network traffic is rising sharply.

Bitcoin (BTC) Live Price