Crypto Market Flips Green — But Is Bitcoin Ready to Retest $8,000?
After retracing the Dec.4 10% rally to $7,800, Bitcoin bulls are now attempting to push the price above $7,500 for another shot at $8K.
On Dec. 4, Bitcoin (BTC) unexpectedly rallied hard from $7,080 and over the next 5 hours the digital asset had moved 9.92% to trade for $7,788. The strong surge briefly broke the pattern of lower highs lower lows. But by the end of the day, the price had retraced back to $7,100.
Crypto market weekly performance. Source: Coin360
Bitcoin price slowed down as it met resistance at $7,800 and was unable to set a higher high above $8,000. Traders will note the high volume nodes of the volume profile visible range (VPVR) at $7,850 and an even larger one at $8,040. Given that the price stopped short both these nodes, the next push from bulls will need to be stronger and with sustained volume to overcome this zone.
Ultimately, Bitcoin price remains trapped below the long term descending trendline and since Jun. 26 there is a clear pattern of price running up to the trendline, rejecting and falling into another phase of lower highs.
BTC USD daily chart. Source: TradingView
The situation has been less than ideal for perma-bulls who are lured into each large price drop under the belief that either a bottom has been found or the most recent drop presents an opportunity to open a low leveraged long position.
Many following this strategy have either been stopped out, liquidated or went into the red on their investments.
Meanwhile, those playing both sides of Bitcoin’s price action will have recognized that the current trend of dropping to the lower trendline of the descending channel is followed by a strong oversold bounce that culminates with a brush against the main descending trendline where traders will have opened shorts, which they ride back down to lower trendline. Wash, rinse, repeat.
BitMEX XBTUSD Liquidations chart. Source: Skew.com
According to data from Skew Markets, yesterday’s surge liquidated nearly $60 million in BitMEX leveraged positions. Additional news of the week that might weigh on investor sentiment was crypto Twitter chatter that Bakkt’s Bitcoin futures contracts are only 37% backed by Bitcoin, rather than the long purported 100% backing. Furthermore, in the late hours of Dec. 4, crypto media reported that Bakkt CEO Kelly Loeffler is departing Bakkt to serve as a United States Senator representing the state of Georgia.
Surely this news does not bode well for investor sentiment but it's likely that the narrative will soon shift to something along the lines of suggesting that Loeffler can advocate for crypto-supportive legislation from her new position as a senator.
Fear & Greed Index. Source: alternative.me
The Crypto Fear & Greed Index reading is back to “Extreme Fear.” Given that investors perceiv