Bullish and Bearish talk
The price of Bitcoin reached a new all-time high of $35,776 and has stagnated ever since. Here’s a summary of the probable bearish and bullish cases for BTC.
The Bitcoin price reached a new all-time high of $35,776 at Binance on January 6th. Following the explosive overnight uptrend of Bitcoin (BTC), analysts in the chain are generally optimistic about the short-term trajectory. Although many agree that the rally is starting to show signs of overheating, it’s not yet overbought.
The main catalyst behind Bitcoin Bank reviews strong rebound has been the continued increase in demand from buyers on Coinbase. Over the past week, Coinbase, the largest exchange in the United States, saw premiums of around $100. This means that compared to Binance and other major exchanges, Bitcoin has been trading at a higher price on Coinbase. This could indicate a growing demand for Bitcoin from high net worth investors and potentially institutions.
Bitcoin recovered strongly overnight, posting a 10% gain in just 10 hours. After the last rise, the chain’s analysts have said that it’s likely that BTC still has room to grow, considering that several indicators in the chain show that the market could overheat further if it follows the previous bullish cycles.
The short-term bullish case of Bitcoin
Willy Woo, a network analyst and creator of Woobull, said the current Bitcoin rally is „warm“ but has not yet warmed up. Woo showed the price chart of the network value ratio of Bitcoin transactions, or NVT for short, with premium, noting that the current rally has firepower for another upward leg, based on the previous peaks of 2013 and 2017.
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Bitcoin NVT is measured by dividing Bitcoin’s market capitalization by the daily volume of transactions processed in the Blockchain in US dollars. The indicator is usually used to determine if Bitcoin is over- or undervalued at a given time. Woo said the higher speculative premium in the spot market, which occurs due to actual demand from buyers, is another indicator that the rally isn’t overvalued yet:
„This is the amount of ’speculative premium‘ we have right now compared to similar phases in the 2 previous bull markets. …] Note the higher-than-normal speculative premium in 2018-2019 when BitMEX led the increase in derivatives dominance, then dominated by the spot dominance when Michael Saylor led the spot buying charge.
Glassnode analysts found that the MVRV Z-Score indicator is pointing to the same levels seen in the 2017 Bitcoin bull market. The MVRV indicator is typically used to assess whether Bitcoin is over- or undervalued compared to its „fair value“. If Bitcoin’s market capitalization is significantly higher than its realized value, which is the BTC valuation calculated based on where investors buy it, it has historically marked a peak recovery.
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Currently, the Bitcoin MVRV Z-Score indicator is still far from indicating a market cap compared to 2017. Glassnode analysts explained that the MVRV Z-Score indicator reached five and is now at „the levels of the main bull market of 2017. But the analysts also explained that „In 2017, $BTC made another 10 times over the course of 6 months. Therefore, both the MVRV Z-Score indicator and the Bitcoin NVT show that BTC has room for a wider rally in the near future.
Alex Saunders, a crypto-currency analyst, also pointed out that Bitcoin and Ether (ETH) volume on PayPal reached a new high of $110 million. Although Google Trends data suggests that retail demand is not at 2017 levels, it is still high on PayPal:
„Retail demand is absolutely through the roof for $BTC and $ETH with PayPal on track to crush its highest daily volume of $110 million. The general public is getting the magic internet money virus, just as a wave of institutional money has begun to arrive.