Author: Matt Crosby, Bitcoin Magazine; Translated by: Tao Zhu, Golden Finance
Since breaking through the $60,000 mark, Bitcoin has been climbing steadily and is currently hovering close to the $70,000 level, a price it has not reached in months. As market sentiment heats up, investors are wondering if Bitcoin has the strength to reach new all-time highs or if it will struggle to break through key resistance levels.
Healthy Emotions
The Fear and Greed Index is a useful tool to understand market sentiment and how traders view Bitcoin's direction. Currently, the index is at the "greed" level of around 70, which is historically seen as a positive sign, but is still quite some distance away from extreme greed levels that could indicate a potential market top. The index measures market sentiment, with lower levels indicating fear and higher levels indicating greed. Typically, when the index exceeds the 90+ range, the market becomes overly bullish, raising concerns of overextension.
Figure 1: The Fear & Greed Index shows healthy positive sentiment.
It is worth noting that last year, when the Fear and Greed Index reached similar levels, Bitcoin was trading at around $34,000. Since then, it has more than doubled to $73,000 in the following months.
Key Support
The short-term holder realized price measures the average price that new Bitcoin investors pay for their Bitcoin. It is crucial because it often acts as a strong support level during bull markets and resistance during bear markets. Currently, this price is around $62,000 and Bitcoin has managed to stay above this price. This is a promising sign because it shows that new market participants are taking profits and that Bitcoin is holding above a key support area. Historically, a break below this level has led to market weakness, so holding this support is key to any sustained rally.
Figure 2: Realized prices for short-term holders have been reclaimed.
We have seen this dynamic in past cycles, particularly during the 2016-2017 bull run, where Bitcoin retraced to this level multiple times before continuing to climb higher. If this trend continues, Bitcoin’s recent breakout could set the stage for further gains.
Market stability
One area traders often watch is the funding rate, which indicates the cost of holding a long or short position in Bitcoin futures. The funding rate has been volatile over the past few months, swinging between overly optimistic long positions and overly pessimistic short positions. Thankfully, the market has now stabilized, with the funding rate at a neutral level. This is a healthy sign as it shows that traders are not over-leveraged in either direction.
Figure 3: Futures markets have deleveraged and returned to healthy levels.
In the neutral zone, there is less risk of liquidation cascades, which is a common phenomenon when over-leveraged positions are wiped out, causing the market to fall sharply. As long as the funding rate remains stable, Bitcoin can have the breathing room it needs to continue to rise without large fluctuations.
The Hard Road to $70,000 and Beyond
While market sentiment and technicals suggest Bitcoin is in a healthy state, there is still significant resistance above. First, the current resistance trend line is a resistance line that Bitcoin has struggled to break. This downtrend line has been tested multiple times, but each time, Bitcoin has retraced after hitting the line.
Beyond this, Bitcoin faces some additional hurdles, such as $70,000. This level has served as resistance in the past and represents a psychological level that traders are likely to keep a close eye on. Above this, all-time highs are between $73,000 and $74,000. Breaking through this level would be a significant bullish sign, but Bitcoin may need multiple attempts to clear this level.
Figure 4: Bitcoin has significant resistance at $70,000 and above.
One positive technical factor is the recent recapture of the 200-day moving average. This is a key level for investors to watch, as it has served as resistance for Bitcoin over the past few months.
Macro environment: Institutional and ETF inflows
In addition to technical indicators, the macro environment is also increasingly favorable for Bitcoin. Institutional funds continue to flow into Bitcoin exchange-traded funds (ETFs). Over $1 billion has flowed into Bitcoin ETFs in the past few days, reflecting the growing confidence in the asset. In the past few weeks, we have seen ETF inflows increase by hundreds of millions of dollars, which shows that smart money, especially institutional investors, are bullish on the future of Bitcoin.
Figure 5: Bitcoin ETFs have seen massive inflows recently.
This is important because institutional money tends to take the long view, providing a more stable base of support than retail speculation. In addition, as the stock market and even gold have risen in recent months, Bitcoin seems to have lagged slightly. This could set the stage for Bitcoin to rise, especially if investors move from traditional assets to the riskier Bitcoin space.
in conclusion
Bitcoin's price action, funding rates, and sentiment all suggest that the market is healthier than it has been in months. Institutional inflows into ETFs and an improving macro environment are further driving bullish sentiment. However, there is significant resistance ahead, and any rally is likely to be challenging before Bitcoin can truly break out to new highs.
