Bitcoin’s bounce above $32,000 boosted the mood among traders who believe the bottom is in, but some analysts caution that heavy resistance blocks the road to new highs.
Traders are showing a renewed sense of hope after Bitcoin’s (BTC) price held onto the $32,000 range for what could be the second day in a row.
Data from Cointelegraph Markets Pro and TradingView shows that bulls have managed to regroup at the $32,000 level, where Bitcoin has hovered throughout the day, but traders are patiently waiting for further confirmation that Bitcoin may be in the midst of a trend reversal before fully reentering the market.
Here’s what analysts and investors expect next from Bitcoin’s price.
CME futures see a bullish surge
According to a recent report from Delphi Digital, an aggressive reversal was observed in the CME futures basis on Wednesday and that this is a bullish sign for BTC traders who scooped up “cheap” futures contracts. The resulting contango is interpreted as bullish because the futures price is above the spot price of the asset.
As seen in the chart above, the open interest for CME’s Bitcoin futures doubled from $1.25 billion on Monday to $2.5 billion on Tuesday after institutions positioned themselves “slightly net long after an extended period of being short.”
While leveraged funds remain net short as they utilize CME futures to hedge their spot exposure, Delphi Digital indicated that they have probably “closed out some amount of their positions.”
Delphi Digital said:
“Overall, CME’s fresh futures contract creation is a slightly bullish narrative, considering BTC had a mini pump to reclaim its range a few hours after the New York session ended. As noted above, futures basis on CME hit negative levels yesterday before posting a sizeable reversal. All the data points to people buying up futures contracts as BTC spiked below the price range it’s sat in for months now.”
Multiple zones of resistance remain in Bitcoin’s path
Bitcoin’s recovery above $32,000 reignited bullish optimism for many traders, but the road ahead is by no means a walk in the park due to the multiple zones of resistance that lie overhead.
According to pseudonymous crypto Twitter analyst Rekt Capital, many of the previous support levels for Bitcoin, including $35,000 and $37,000, could soon act as resistance.
Overall, #BTC has a cluster of potentially new resistances ahead
— Rekt Capital (@rektcapital) July 22, 2021
The red $32200 Weekly level it lost as support last week
The recently lost blue 50 week EMA ($33700)
And the black 2021 Higher Low (~$34800)
All old supports
All possibly new resistances$BTC #Crypto #Bitcoin pic.twitter.com/rYGSjoPAlY
At the time of writing, Bitcoin’s price is in the process of attempting a sustained breakout above $32,200 where the price has been stuck for most of the day.
Exchange inflows historically spike near market bottoms
Another sign of bullishness came from pseudonymous Twitter user IzzyEibani, who highlighted the recent spike in exchange inflows as a possible sign that the bottom is in.
A little bull hopium for you, inspired by a post from @MrBenLilly
— IzzyEibani (@IzzyEibani) July 22, 2021
Exchange inflows spiked 3 times since 2017, and each spike corresponded with a major bottom in price.
And now, the 4th spike just completed...#bitcoin #BTC pic.twitter.com/FEys8uZ59G
A closer look at the chart below shows that there have been three instances in the past on Aug. 1, 2017, Nov. 30, 2018, and March 12, 2020, where inflows to exchanges spiked in a manner similar to what was seen on July 16. Each time, the market bottomed within a short time period following the inflows.
If the market unfolds in a similar fashion to the historical pattern, there is a strong possibility that the recent drop to $29,500 may have been the bottom.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
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