Similar to Stockholm Syndrome, where prisoners form a psychological bond with their captors, crypto winters have a way of turning even the most optimistic cryptocurrency supporters bearish in a short amount of time.
Evidence of this reality became fully apparent on July 19, after Bitcoin’s (BTC) rally back above $23,000 met widespread warnings that the move was merely fake before the market rushes to new lows
$BTC
Not bad. But keep in mind that this can still turn into a classic fake-out.
My general thesis remains, bear market rally pic.twitter.com/VxnH4mo6hW
— Jimie (@Your_NLP_Coach) July 19, 2022
While the possibility of fresh lows in the future cannot be ruled out, here’s a look at analysts’ take on how this BTC breakout could be different than most investors are anticipating.
This time “it’s different”
The targeted “this time is different” message was circulated by pseudonymous Twitter user Trader XM, who posted the chart below outlining why BTC is poised to move higher.
BTC/USD 4 hour chart. Source: Twitter
As highlighted in the chart above, even as four retests of the range high occurred, BTC price has not retested the range low and this suggests that buyers are now stronger than sellers.
In response to Trader XM’s post, Twitter user Justiinape replied, “$27k-$28k seems imminent.”
Merchant XM said:
“Agree man, go to $27k to $28k and then months of consolidation. Let’s enjoy this move before the long hibernation.”
The next major resistance is at $27,100
Further evidence that BTC could surge higher came from on-chain data firm Whalemap, which published the chart below, highlighting the lack of buying demand between $23,000 and $27,000.
Bitcoin Volume Profile. Source: Twitter
whale card said
“$27,100 should be the first resistance on our way up. Large supply gap between current prices and $27,000.”
Related: Bitcoin price is headed towards $24,000 and traders are expecting more upsides after retesting support
Shorts get REKT
Evidence that crypto traders were being lulled into an overly bearish outlook came from cryptocurrency analyst Dylan LeClair, who published the chart below showing the impact bitcoin’s move above $23,000 had on futures traders.
BTC/USD 2 hour chart. Source: Twitter
As highlighted in the chart, a large amount of Bitcoin short positions were opened between June 15th and July 15th and these traders are now on the losing side of the trade.
LeClair said
“Tens of thousands worth of BTC short open interest is currently underwater.”
While a bitcoin reversal and renewed downside is still a possibility, the current momentum points to further upside in the short-term.
The total cryptocurrency market cap is now $1.055 trillion and Bitcoin’s dominance rate is 42.1%.
The views and opinions expressed herein 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 do your own research when making a decision.
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