Author: Matt Crosby, Bitcoin Magazine; Compiled by Tao Zhu, Jinse Finance
Since breaking through the $60,000 mark, Bitcoin has been steadily climbing, currently hovering around the $70,000 level, a price it has not reached in several months. With the market sentiment heating up, investors want to know if Bitcoin has the strength to reach new all-time highs, or if it will struggle to break through key resistance levels.
Healthy Sentiment
The Fear and Greed Index is a useful tool for understanding market sentiment and how traders view the Bitcoin trend. Currently, the index is at around 70, a "Greed" level, which has historically been seen as a positive signal, but still some distance from the extreme greed levels that may 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 about overextension.
Figure 1: The Fear and Greed Index shows a healthy, positive sentiment.
Notably, last year, when the Fear and Greed Index reached similar levels, the trading price of Bit was around $34,000. Since then, it has more than doubled in the following months, reaching $73,000.
Key Support
The Short-Term Holder Realized Price is a measure of the average price that new Bit investors paid for their Bit. It is crucial because it typically acts as a strong support level during bull markets and a resistance level during bear markets. Currently, this price is around $62,000, and Bit has successfully maintained above this level. This is a promising sign, as it indicates that new market participants are profiting, and Bit is holding above a key support area. Historically, a breach of this level would lead to market weakness, so maintaining this support is key to any sustained rebound.
Figure 2: The Short-Term Holder Realized Price has been reclaimed.
We have seen this dynamic play out in past cycles, particularly during the 2016-2017 bull market, where Bit would repeatedly retrace to this level before continuing its ascent. If this trend continues, Bit's recent breakout may lay the foundation for further upside.
Market Stabilization
One area that traders often focus on is the funding rate, which indicates the cost of holding long or short Bit futures positions. Over the past few months, the funding rate has been volatile, oscillating between overly optimistic long positions and overly pessimistic short positions. Fortunately, the market has now stabilized, with the funding rate at neutral levels. This is a healthy sign, as it indicates that traders are not over-leveraged in either direction.
Figure 3: The futures market has deleveraged and returned to healthy levels.
In the neutral zone, the risk of liquidation cascades is lower, a common phenomenon when over-leveraged positions are wiped out, leading to a sharp market decline. As long as the funding rate remains stable, Bit can have the breathing room it needs to continue its upward trajectory without experiencing significant volatility.
The Difficult Path to $70,000 and Beyond
While the market sentiment and technicals suggest that Bit is in a healthy state, there are still significant resistance levels above. First, the current resistance trend line is a resistance that Bit has struggled to break through. This descending trendline has been tested multiple times, but each time, Bit has retraced after reaching it.
Additionally, Bit faces additional hurdles, such as the $70,000 level. This level has historically been a resistance, representing a psychological level that traders may be closely watching. Above this, the all-time high is in the $73,000 to $74,000 range. Breaking through this level would be an important bullish signal, but Bit may need multiple attempts to clear this level.
Figure 4: Bit faces significant resistance above $70,000.
A positive technical factor is the recent reclamation of the 200-day moving average. This is a key level that investors have been watching, as it has been a resistance for Bit over the past few months.
Macro Environment: Institutional and ETF Inflows
Beyond the technical indicators, the macro environment is also becoming increasingly favorable for Bit. Institutional capital continues to flow into Bit exchange-traded funds (ETFs). Over the past few days, over $1 billion has flowed into Bit ETFs, reflecting growing confidence in the asset. In the past few weeks, we have seen ETF inflows increase by hundreds of millions of dollars, indicating that smart money, particularly institutional investors, are bullish on Bit's future.
Figure 5: Bit ETFs have seen significant inflows recently.
This is important because institutional capital tends to have a longer-term view, providing a more stable support base than retail speculation. Additionally, with the recent rise in the stock market and even gold, Bit has appeared to lag slightly. This may lay the foundation for a Bit rally, especially if investors shift from traditional assets to the riskier Bit space.
Conclusion
The price action, funding rates, and sentiment in the Bit market all indicate a healthier market compared to a few months ago. The inflow of institutional capital into ETFs and the improving macro environment further drive the bullish case. However, there are significant resistance levels ahead, and any rebound may face challenges before Bit can truly break new highs.
