Market forecast: Why Bitcoin pumped 14% in 30 minutes

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as always, the market newsletter is split into two parts: Bitcoin outlook by Joseph and on-chain analysis by Cole.

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Tl;dr

  • Bitcoin rallied by 14% in just 30 minutes.

  • It coincided with Elon Musk changing his bio to “Bitcoin.”

  • Some say the record options expiry fueled the rally.

  • This rally is important because there were lots of bearish on-chain indicators.

  • Miners were selling, whales deposited Bitcoin to exchanges, and stablecoin inflows were lagging.

  • $35,000 level was key to break. Next up is $38,000, which is a critical resistance area.

  • Dogecoin plummeting after surpassing $0.8 likely led capital to flow back into Bitcoin.


The Bitcoin Outlook by Joseph Young

Elon Musk.

Bitcoin rallied from $32,000 to $37,100 in less than an hour after Musk put “Bitcoin” in his bio.

Musk’s profile bio change is much more than a beloved $791 billion conglomerate’s CEO tweeting about Bitcoin.

There have been chatters that Musk might be the one accumulating Bitcoin on Coinbase over the past week.

Coinbase saw high premium compared to Binance throughout the past week.

Bitcoin was trading about $200 higher on Coinbase at peak times. This suggests that a high-net-worth investor was buying a significant amount of Bitcoin.

Musk’s profile change likely caused FOMO, leading people to think that Musk was the one bidding on Coinbase.

But that’s not all. There are other bullish narratives to go along with it.

  • Options expired, alleviating some selling pressure from the market.

  • Ray Dalio, the famed CEO of the world’s largest hedge fund Bridgewater, spoke positively about Bitcoin.

  • Robinhood is facing criticism after halting the trading of Gamestop (GME). Robinhood traders might be moving into crypto.

Key Bitcoin levels and things to watch out for

The big level in the short term remains $38,000.

$38,000 has been a resistance level for nearly two weeks at this point.

If $38,000 breaks cleanly, and Bitcoin consolidates above it, there is a high probability of Bitcoin retesting the all-time high.

In the short term, this means that altcoins and DeFi tokens would likely stagnate.

Ideally, the best position would be to long Bitcoin from below, and when it consolidates, bid the DeFi basket.

Source: TradingView.com

I am expecting Bitcoin to range for a bit before breaking above $38,000. Other than that, Bitcoin overrode a lot of the bearish signals.

Miners were dumping hard. Whales were depositing Bitcoin to exchanges and a lot of put options were being filed.

Bitcoin overwhelmed all of these bearish indicators with a single 1-hour candle. This is significant.

Bitcoin miners represent one of the major sources of external selling pressure on Bitcoin.

Bitcoin overriding this trend with a short-term burst is highly optimistic.

What top traders are saying

CM: [Respected derivatives trader] “Irrespective of ur view on $BTC. Elon tweet is likely to induce significant FOMO, and it’ll pbly be focused in US session. So, basic plan is to b long some amount your comfy to run in high vol, and see where it is at end of US session. Keeping in mind that general risk looks bad.”

Alex Wice: [Top trader on FTX leaderboard] “Wait Until America Wakes Up. Bitcoin To Infinity Now.”

Ki Young Ju: [CryptoQuant CEO] “Elon's tweet overrides all other bearish signals...”

Bitcoin Jack: [Predicted $4k bottom, called $19k rally] “Just increased btc long position size by 10%”

CL: [High ranking trader on Binance Futures leaderboard] Pinpointed Coinbase premium before the rally. “Coinbase casually trading 200 above, imo if you have enough $, you can make the market believe in any narrative. what if this guy manage to paint BTC up stonks down meme"?”

Market X-Ray by Cole Petersen

Bitcoin has seen some wild price action throughout the past few days, but its underlying health — and the on-chain factors influencing its price action — remain relatively unchanged since the last market x-ray post that we published on Monday.

There have been a few notable developments that investors should take note of, as they may offer some insights into where the market is trending in the coming few days.

Tracking the Ebb and Flow of Miners

Miner outflows to exchange wallets are once again on the rise, with the selling pressure from these parties being incessant and likely the main reason why the market has felt so heavy over the past few weeks.

Outflows spiked yesterday after steadily rising throughout the past week, which may have been what caused the sudden sub-$30,000 dip.

Courtesy of CryptoQuant.

Fortunately, the level of absorption seen in the lower-$30,000 region points to underlying strength amongst bulls.

Stablecoin Deposits are Rising

As for who might be absorbing the selling pressure being placed on the market by miners, data points to massive inflows of stablecoins to exchanges as a source of buy-side pressure.

Ki Young Ju, the CEO of CryptoQuant, spoke about this in a recent tweet, explaining that people are depositing stablecoins to exchanges as a rapid pace, which points to an imminent injection of capital into the market.

“People are depositing stablecoins to exchanges. You know what to do.”

Courtesy of CryptoQuant.

The macro situation surrounding Wall Street and the long-mused “higher finance cabal” working against retail traders (i.e. r/WallStreetBets may be boosting crypto from a pure narrative standpoint.

People are realizing the merits of a free and censorship-resistant finance market, which may lead to inflows of new participants to the crypto ecosystem — with Bitcoin acting as the “gateway drug.”

Whales are Buying

Fed up retail investors aren’t the only ones who appear to be loading up on Bitcoin in light of recent macro events.

Yesterday, a large buyer averaged into a large BTC position over the span of a few hours, driving the Bitcoin premium on the platform up to as much as $300 at one point.

Courtesy of Unfolded.

At the moment, the only macro/on-chain trend really working against Bitcoin is heightened selling pressure from miners.

Once this dissipates, I personally expect Bitcoin to see an impulse wave towards its all-time highs of $42,000.

About Us:

Joseph Young is a cryptocurrency analyst who has been in the space since 2014. He contributes to Forbes, CoinTelegraph, and a host of other top crypto news sites. Over his 6+ years in the space, he has built countless connections with industry leaders and has amassed over 100,000 followers on Twitter.

Nick Chong is a passionate crypto researcher who specializes in identifying and extracting conclusions from trends within the rapidly emerging DeFi-space. He has been involved in the crypto markets since 2016, and sources deals for a Vancouver-based crypto venture fund. 

Cole Petersen first learned about Bitcoin in 2013 and began working in the space in 2017. While on a gap year as a student at the University of California, Irvine, he now leads LINKPAD, a venture capital fund, and does part-time work as an associate at BlockVenture.


Pepe of the Day:

Pepe the Frog has become the unofficial mascot of the crypto markets, so we feel it is only fitting to add a “Pepe of the Day” section highlighting only the finest and rarest Pepes.

Today’s featured Pepe: “Soon we look upon the Earth as if we were gods.”