Bitcoin (BTC), which could still crash to $29,000 or lower, is price action “healthier” than it was a week ago, according to the latest research.
Analysts at Decentrader, a trading platform, stated that the BTC price action has finally shown “green shoots” of optimism in a Friday market update.
BTC: Eyes on “near term relief bounce”
Market analysis now examines the likely outcomes of the rangebound behavior that has been observed over the past few days after a hard week where BTC/USD dropped to just below $33,000.
Decentrader sees reason to be cautiously optimistic where there wasn’t one a week ago.
Analysts summarized that they believe the shift in the derivatives landscape and the extremely negative sentiment background increase the possibility of at least a short-term relief bounce.
Factors that have not “reset” fully as price action drops, such as the structure of derivatives markets, are responsible for this. This includes open interest falling toward less speculative levels and deepending negative funding rate.
Cointelegraph explained that negative rates are indicative of market sentiment, which calls for new losses. This is often the perfect environment for an upward price movement.
“We are also seeing meaningful buyers step into, which is driving an potential change in the high time frame trend from bullish to bearish,” said the market update. This was in addition to the positive pressure on available BTC supply.
Although it is not typical of bull markets, selling overall suggests that those who are behind it are suffering.
Chart showing open interest for Bitcoin futures. Source: Coinglass
$29,000 or less is considered less likely
The outlook for support in the future is a bounce zone of $29,650. This would only be possible if several other areas over $30,000 fall.
Related: Bitcoin ‘enters value zone’ as BTC price floor metric goes green again
Decentrader stated that resistance is between $38,850 to $39,700 and then a significant “empty” patch at $47,900, and finally $53,400.
The update states that support remains at $32,700 for the moment, but there is evidence to suggest that it has reached that level with Monday’s wick falling just $300 below it.”
“Beyond this level, the next support at $29,650 is just shy $30k. This leaves the door open to a sub-$30K liquidity grab.”
According to the Crypto Fear & Greed Index the sentiment continues to be in “extreme fear” despite funding. This now surpasses the 2018 bear market trough as well as the March 2020 coronavirus crashes in terms of length.
Crypto Fear & Greed Index. Source: Alternative.me