As a researcher with over a decade of experience in the dynamic and ever-evolving world of cryptocurrencies, I must admit that the recent 10% surge in Bitcoin price has certainly piqued my interest. However, I find myself approaching this uptrend with a healthy dose of caution.
Lately, a 10% increase in Bitcoin‘s price has transformed crypto investors’ sentiment from pessimistic to optimistic. However, this rise might be at risk because of the growing influence of stablecoins. Consequently, Bitcoin investors should exercise caution as the upward trend may potentially reverse.
Why is Bitcoin Price Rally In Jeopardy?
Starting on September 6, a strong surge in Bitcoin’s price occurred, which increased it by approximately 10% from $52,500 to $58,129. This surge shifted the overall crypto market sentiment towards a guarded optimism, as evidenced by the Alternative Fear & Greed Index (FGI) rising from 22 on September 6 to 31 by September 12.
As a researcher observing the cryptocurrency market, I’ve noticed an interesting development since Bitcoin reached its all-time high in March 2024: The influence of stablecoins has been on the rise. While the general sentiment remains optimistic, it’s crucial for investors to exercise caution as the broader trend for Bitcoin seems to be bearish.
Stablecoin dominance is the relative measure of stablecoin market capitalization compared to the total cryptocurrency market capitalization.
According to data from Alphractal, the fall in stablecoin dominance, which occurred between June 2023 and early 2024, happened concurrently with a surge in Bitcoin’s price. Since this metric has recently shown an increase, it might indicate that the downtrend may not have concluded yet.
An increase in the influence of stablecoins over other digital currencies indicates that their total market value is growing. This trend suggests that investors are adopting a more cautious approach. If this pattern does not reverse in the near future, there’s a strong possibility that the current upward trend could be reversed.
Bitcoin Price Analysis: BTC Bulls Uncertain
Based on recent market trends, Bitcoin’s near-term price prediction appears optimistic due to its recent surge. Nevertheless, over the past six months, we’ve seen a pattern of consolidation with lower highs and lower lows. If Bitcoin manages to achieve a new peak above $65,000, it significantly increases the likelihood of resuming the ongoing bull market.
From my perspective as a researcher, if Bitcoin (BTC) fails to break through the resistance zone between $63,000 and $65,000, the short-term optimistic forecast appears questionable at best.
In simpler terms, both the Relative Strength Index (RSI) and the Awesome Oscillator (AO) indicate a temporary advantage for the bulls in the short term. But if these indicators don’t show signs of stabilizing above their average levels of 50 for RSI and 0 for AO, investing based on a recovery rally could be risky.
For the past half year, every brief market surge has been followed by an immediate drop in value. Therefore, if Bitcoin doesn’t experience a prolonged increase in demand that can counteract a potential sell-off, it seems improbable for the cryptocurrency market to turn bullish.
Consequently, the Bitcoin forecast suggests a generally positive perspective but tends to favor lower prices.
If the price of Bitcoin falls below $54,000 on the daily chart, it would weaken the short-term optimistic outlook. As a result, Bitcoin might slide towards the support range of around $52,271 to $50,710.
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2024-09-12 17:08