Bitcoin (BTC), although it is possible to win back some lost ground, a retest at $40,000 could test bulls.
Trading suite Decentrader expressed cautious optimism about BTC price action in its most recent market update, February 11.
Derivatives turn complementary
BTC/USD rallied above $45,500 thanks to US economic data. Since then, it has fallen back into the range it defined this week.
Decentrader sees the possibility of a decline in the short-term, even though on-chain metrics may be displaying rare bull signals.
The update stated that Bitcoin is at a neutral level, with clear zones of resistance above and below.
Sentiment, which is now in neutral territory rather than “fear”, and encouraging signs from derivatives market — low funding rates, and a negative short/long ratio — are all positive indicators that bulls are in their favor.
Decentrader said, “We now have a sustained period with negative funding rates. We’ve seen OI [open-interest] drop over the time and, importantly, we saw Long/Shorts ratio turn negative.”
The accompanying chart shows that BTC/USD rallied three times in such rare circumstances since the end of 2020.
According to Coinglass, funding rates were still generally negative on Friday.
Chart of BTC funding rates. Source: Coinglass
“Nothing has changed” in the short-term outlook
According to the forecast, a decline could result in a rebound at $39,000 if bulls are not too shaken by breaking the $40,000 mark.
Related: Bitcoin’s ‘fair value” rises to $50K as exchange stablecoin reserves reach $27B
The update stated that “To the upside there are resistance levels either side of an important point of collapse from the summer crash at $47.950 and $52,660.”
It is, however, a case of “waiting and seeing.”
Crypto Ed, a popular analyst and trader, stated that “Nothing has changed.” In his latest social media update.
“Aim for a move towards $40k. A bullish scenario suggests a rebound to 48k. When we surpass 40k, bearish is in play.”
BTC/USD chart showing expected trajectories. Source: Crypto Ed/Twitter