As the price of Bitcoin fell below $40,000, the market entered a “wait-and-see phase”

Bitcoin’s price trend (Bitcoin), since nervous traders are still not sure what will happen next after the market crash last week, the relatively weak cryptocurrency market on May 27 was relatively weak Leveraged traders are eliminated BTC fell to a low of $30,000 before the price rebounded.

Data from Cointelegraph Markets Professional Edition with Transaction view It shows that although the price of Bitcoin has successfully set higher highs and lower lows in the past week, the bulls will continue to face strong resistance under any meaningful attempts. Break through $40,000 It’s like a bear defending an important psychological level.

BTC/USDT 4-hour chart. source: Transaction view

For many traders, the recent correction may trigger the market crash in 2017 and 2018 and the subsequent two-year cryptocurrency winter PTSD flashback, which may be the reason for the current market hesitation.

Given that many traders are not sure what the price of Bitcoin will be, it is wise to consider the various bullish and bearish scenarios that may arise and evaluate the views of analysts in the industry.

After the recent sell-off, traders remain cautious

David Lifchitz, managing partner and chief investment officer of ExoAlpha, believes that it is important to pay close attention to recent market events and review the catalysts that caused the current situation.

Lifchitz told Cointelegraph that after the “almost uninterrupted bull market rose from $10,000 in October 2020 to BTC’s all-time high of $65,000 in mid-April 2021″, the market saw several waves of profit-taking. Significant deleveraging in 2021”. “The price of BTC fell 54% to $30,000, while the price of Ether (ETH) And altcoins have been hit even harder.

According to Lifchitz, the adjustment succeeded in “significantly reducing the leverage that prevails in the ecosystem”, which can be seen as a healthy development of the entire market because it will help “build a more stable foundation.”

Estimated Bitcoin leverage ratio. source: Number of encryption

Lifchitz warned that although the data showed that some early bargain-hunting buyers managed to buy tokens near lows, both trading volume and open futures contracts remained weak, “indicating that there is no urgency for tightening.”

Less than 24 hours before the monthly options for Bitcoin and Ether expire, Lifchitz believes they are hindering “any meaningful move in the short term.” He also suggested that due to the lack of upward momentum and a recent reminder that “prices do not always rise”, it is “difficult to convince burnt investors to return to the game immediately.”

Lifchitz believes that this puts the market in a “wait-and-see phase”, and trend followers and contrarian investors need to “watch the ups and downs” before entering the market.

Lifchitz said:

“The market definitely needs a catalyst to push up or down. Too long without any catalyst will cause investors to get tired, they may decide to cash out and seek other pastures, which will become the center of gravity of cryptocurrency triggers to move downwards. Next. The next few days/weeks will be very clear about what to expect next.”

Bullish indicators abound

Although the average cryptocurrency trader is currently in a state of stagnation, waiting for the next major market movement to show what BTC might do next, the data on the chain indicates the bullish trend of the larger participants, who have taken full advantage of the recent downtrend to pass Buy in.

According to Micah Spruill, managing partner and chief investment officer of S2F Capital, most of the sell-offs seen at recent lows are “people who have re-entered the market” who “have lost money and seem to be struggling.” this point. ”

In a conversation with Cointelegraph, Spruill pointed out the net transfer volume of BTC, which indicated that after the bearish decline from May 17 to 20, “a large amount of USDC and USDT have been sent to exchanges (used to purchase BTC, ETH). Etc.) and keep it for a long time.”

The net transfer volume between BTC and all exchanges. source: Glassnode

Further analysis shows that retail wallets holding 0.1 to 1 BTC and whale wallets holding 1,000 to 10,000 BTC have accumulated at these levels, preparing for the overall upward trend.

Another bullish indicator that Spruill mentioned is the entity’s net growth, which is “returning to previous levels”, and if this trend continues in the next few weeks and the indicator returns to its highs, it may indicate a “bull market”. All strength has been restored”. .

The physical net growth of Bitcoin. source: Glassnode

In general, Spruill believes that BTC will make positive progress in the future, although due to various factors, the timing is doubtful.

Spruill said:

“I think we might spend a longer period of time (months) between the US$30,000 to US$42,000 level because the market has digested recent events and we endured the re-accumulation period in the middle of the cycle. In addition, we may There is a recovery similar to COVID, so that we see that Bitcoin will soon break through that range and recover much faster than others expected.”

The views and opinions expressed here are only those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading action involves risk, so you should conduct your own research when making a decision.