Bitcoin jump to $ 32,000; What is the next move?

Bitcoin and digital currencies over the past few days have shown signs of a recovery wave, and technical indicators confirm that the market is now in a state of saturation; But despite the worrying conditions of the world economy, can we hope for a change in the overall market trend?

To Report After nine weeks of falling, Bitcoin Desk is now showing signs of market vitality on its chart. As it turns out, intensifying sentiment and saturation in the market has encouraged some buyers who refused to enter new trades during this period to return to the market.

The bulk of this uptrend occurred on Monday, May 30, and at the same time the price of Bitcoin reached over $ 30,000. The mid-week jump of Bitcoin is the biggest overnight price increase of this digital currency since March (March 1400), in which the price of Bitcoin increased by 7.8%.

Yesterday, many Altcoins outperformed Bitcoin, indicating that investors are still less willing to take risks. Bitcoin dominance (the market value of Bitcoin compared to the market value of other digital currencies) has been on the rise over the past three days. The jump in bitcoin dominance comes as the index recently broke its one-year downtrend line on May 13th. Usually in declining markets, Altcoins perform poorer because of their higher investment risk than Bitcoin.

Some Altcoins, however, experienced significant jumps on Tuesday, and the bearish sentiment in their market eased somewhat. Cardano and Oxy Infiniti, for example, experienced a 15 percent jump during this period, while the previous day’s growth of bitcoin was limited to 4 percent.

In contrast, Olench lost 3% of its value yesterday and Monroe experienced a 4% drop. Overall, digital currencies and the global stock market continue to experience high ups and downs because investors in these two markets have interrupted their recent sales.

Vendors have been forced out of the market

Bitcoin’s jump on Sunday boosted the trading volume of liquidated shorts; This time it was bigger than the liquidation of the short situations on May 11th. This indicates the formation of short squeeze sales in the market; That is, a situation in which short (traders) traders are forced to exit their trading positions with a sudden rise in market prices.

Liquidation occurs when a money changer completely closes the trader’s leveraged trading position to prevent the initial amount owed to the trader from being burned. In fact, trading platforms do not allow a trader’s account balance to be less than his debt. This happens primarily in futures markets.

The macroeconomic situation continues to be to the detriment of digital currencies

As can be seen from the situation of some indicators, the saturation of sales in the market of Bitcoin and other digital currencies has reached its peak.

The chart below, provided by MRB Partners, is actually a momentary indicator of the cycle in which sales saturation has now peaked since 2018. This could be a sign of a short-term leap in the digital currency market.

We must also keep in mind that momentum indicators may remain saturated for a long time as prices fall. In such a situation, the indicator crossing the threshold for the sell-saturation range can be a confirmation of the change in the market trend from bearish to bullish; Just like what happened at the end of the previous downtrend. It should be noted that the repetition of this event in the current situation may take several weeks.

Some analysts are skeptical of the recent jump in prices in the digital currency market.

For example, the FundStrat Investment Institute says:

It is possible that Bitcoin will be able to follow the recent recovery wave after 10 weeks by recording a green (bullish) weekly candle on its chart; But the big negative factors that always affect the market have made us cautious when commenting on short-term changes.

UAE Partners released a report last week that addressed these major negative factors; Factors that can still negatively affect the price of bitcoin despite the saturation of sales in the market. For example, the increase in selling pressure in the Bitcoin market after the record-breaking price in November was accompanied by a contraction in the monetary policy of the US Federal Reserve; Conditions in which the negative return on bonds decreases and the amount of liquidity in the money market and bank deposits decreases. The result of this policy change was that the situation in the digital currency and stock markets changed completely after a multi-year boom.