The bull market of digital currency has started, four predictions about the next trend
Editor's Note: This article comes fromChain reference (ID: lianneican), Author: Internal Reference Jun, reprinted by Odaily with authorization.
Chain reference (ID: lianneican)
Chain reference (ID: lianneican)
, Author: Internal Reference Jun, reprinted by Odaily with authorization.
Recently, mainstream cryptocurrencies led by BTC and ETH have risen in turn, especially the prices of BTC and ETH have hit new highs during the year. Let investors wait for the long-awaited bull market. So, what more people care about is how far will this bull market go? How High Will BTC Price Go?
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Bitcoin, almost 95% of circulating BTC turned profit
Market participants appear to have taken profits after Bitcoin (BTC) hit a new yearly high of $11,488 during an impressive bull run.
In fact, Bitcoin plunged 6.12% on Tuesday, hitting a low of $10,580 at 10:00 UTC. Around this price level, a large number of buy orders were filled, which allowed Bitcoin to rebound. About five hours later, its price had risen by 5.84 percent to stand at $11,198. As of 15:00 on Friday, the BTC price was $11,127, and it was still hovering at the $11,100 mark.
Price action on Tuesday, July 28, appears to have formed a pennant on BTC’s 30-minute chart, as two converging lines can be drawn, along the swing’s lows and highs. Usually, in an uptrend, the formation of a pennant leads to further gains.
In the latest edition of DataDash, crypto analyst Nicholas Merten argues that Bitcoin is showing all the bullish indicators analysts have been hoping for.
“For the first time since 2017, we have broken resistance. This is very important. Everything is looking fantastic. We have been consolidating against the resistance line for several months since April.”
Source: DataDash
According to tracking data from on-chain monitoring resource Glassnode, as of July 27, nearly 95% of Bitcoin’s supply is now worth more than it was when it was last moved.
The data on July 27 almost coincides with the previous high set in June 2019, when Bitcoin briefly surged to as high as $13,800.
Data from LookIntoBitcoin shows that, zoomed in, Bitcoin has been profitable every day for 97.7% of its lifetime.
Despite the explosion in earnings and Bitcoin returns in the second quarter, data from exchanges has yet to show a massive sell-off at a certain price point. Inflows surged on Monday, but pressures remained manageable.
Cointelegraph Markets analyst filbfilb emphasized that $10,400 is a strong support area for buyers.
Filbfilb added that he has entered a long position because he "doesn't think the bull market is over at $11,000 yet."
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The selling pressure behind Ethereum (ETH) has steadily increased over the past few days, even though it has experienced a 40% rally in the past week. In fact, more than 1.15 million ETH worth approximately $368 million was transferred to different cryptocurrency exchanges in the past 48 hours. This may indicate that investors are not as confident in Ether's short-term potential.
Source: DataDash
On Tuesday, July 28, a new high for the year was set as the smart contract giant opened at $322.30. Still, the pessimism is clearly visible. Although the price of Ethereum rose to $326.80 within hours of the opening bell, short sellers stepped in and took full control of Ethereum’s price action. The increase in sell orders led to a 6.36% correction that sent Ether to an intraday low of $306.02.
This price level was able to hold and prevented ETH from falling further. This also allowed it to rebound 5.79% to a high of $323.74. However, investors did not sell their tokens, triggering a 3% drop. The second-largest cryptocurrency by market capitalization then rose a few dollars to settle at $317.19, a daily return of negative 1.55%. At $337 as of 15:00 on Friday, ETH is still gaining momentum.
Crypto analyst Nicholas Merten said: "Looking at the Bittrex chart, I noticed that Ethereum is breaking out of an ascending triangle, correcting the previous resistance line, making it a support line."
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ETH hit a new high for the year, surpassing the previous high set in February 2020. There appear to be three main catalysts behind this ETH rally.
First of all, the biggest catalyst for the rise of Ethereum is the explosive growth of the DeFi market. Since May, the total value locked in DeFi protocols has nearly quadrupled to $3.75 billion. Popular protocols such as Compound, Maker, Aave, Synthetic, and Curve Finance have seen significant increases in users since mid-June.
Over the past month, the Ethereum blockchain network has become congested. As the network becomes congested, users need to pay higher gas to process their payments or smart contracts. John Todaro, director of research at institutional trading platform TradeBlock, tweeted that the growth of DeFi will drive ETH prices higher in the long run.
Second, ETH options and spot demand rose. Especially since the beginning of the second quarter of 2020, options and spot demand in the Ethereum market have been huge. Previous rallies have been led by futures markets. During its peak in February 2020, the Ethereum funding rate hovered at 0.2% on BitMEX. This means that long holders have to incentivize short holders with large fees due to market imbalances.
Funding rates for Ethereum futures contracts have remained relatively low during the recent rally. Despite a 30% rise in the past five days, Ethereum’s funding rate on BitMEX is well below 0.2%. This is likely due to the fact that spot and options markets have played a large role in ETH’s continued rise.
The first phase of Ethereum 2.0 is called the Beacon Chain. In order to activate it, developers need to develop a testnet that simulates the conditions of the beacon chain. Positive developments on Ethereum 2.0, especially on the Medalla testnet, may further boost sentiment around Ethereum in the coming months. The fast-growing DeFi market and growing demand in the spot and options markets, combined with the hype of Ethereum 2.0, seems to be driving a strong rebound in ETH.
The upcoming testnet release of ETH 2.0 may be of interest to investors. Therefore, we have reason to believe that this cryptocurrency has more room for appreciation.
The optimism surrounding DeFi and Ethereum 2.0 has finally brought new highs in trading volume and open interest for ETH spot and options markets. Since the second quarter, the ETH options market has continued to usher in new highs in trading activity. Hence, it reinforces the uptrend of ETH in the short-term as well. Santiment, an on-chain cryptocurrency market data analysis firm, said ETH broke through $300 for the 42nd time in its trading history. According to the researcher, it would be significant if the ETH price breaks above $350 as this has only happened 3 times in its history. Santiment noted in a tweet: “Clearly #Ethereum has hit the ‘sweet spot’, with the most stories happening in this price range ($200-300) in its five-year history.”
Based on ethereum's technical market structure, some traders say $308 and $400 remain key short-term resistance levels. Michael van de Poppe, a full-time trader at the Amsterdam Stock Exchange, said on Twitter that ETH rose more than expected. “It’s a bit higher than expected a month ago. But we’re doing well. Probably resistance at the $308 level. But in my view, that’s basically the last hurdle before we get above $400.”
XRP and LTC, or will become sleeping giants
Source: DataDash
Besides BTC and ETH rising, which cryptocurrencies will keep up with them? Crypto analyst Nicholas Merten is bullish on several large cryptocurrencies, which he believes will follow Bitcoin's recent price swings.
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Source: DataDash
Merten is particularly bullish on LiteCoon, the encryption technology ranked eighth in market value. He said, "Frankly, I think this is a great price chart. The price is trading in the lower range at the moment, considering that even if you may have a few weeks of losses, if this really turns around, eventually This could start to pick up. Historically, Litecoin moves very fast.
A good comparison is the silver to gold ratio, just like litecoin and bitcoin. There's been a very, very historic trend in the last two commodity cycles that we've been in and the ones we've been in, silver-to-gold has accelerated and ironically we're seeing that now a trend. "
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Altcoins, perhaps in jeopardy
Recently, as BTC and ETH have surged, many altcoins have followed suit. There are even some altcoins that have seen considerable gains. But analysts have warned that altcoins could begin to bleed as investors dump profits into BTC and ETH.
However, a breach of this level could spark a new uptrend that crushes the altcoin’s recent gains.
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Bitcoin dominance has also reached a historically important support level, which means capital currently in altcoins may start flowing into BTC.
Another analyst explained, “BTC and ETH may dominate for a while. If so, altcoin/BTC trading pairs may see huge losses.”
In fact, many altcoins are not strong enough to support their prices. The rise in currency prices is more due to the project side taking advantage of the situation, and the joint capital side hyping "cutting leeks". The price of this altcoin rises faster and falls even faster.
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