Bitcoin needs a correction after clearing key resistance levels. The market is still far from ‘euphoria’ that could push the price of the cryptocurrency to the $86,000 mark as early as next year. These conclusions are contained in a Stack Funds report.
Analysts described the recent decline in Bitcoin’s price by several thousand dollars as ‘healthy’. In their view, market participants are still in a ‘belief’ phase, which will eventually transition into ‘euphoria’.
The study relies on Glassnode data on unrealized profits and losses. The corresponding chart is built on the ratio of the current Bitcoin price to the market value of coins at the time of their last movement.
Data: Glassnode.
According to Stack Funds’ methodology, ‘euphoria’ corresponds to indicator values above 0.75 (at the time of writing it stood at 0.60, which indicates ‘belief’).
‘Optimism’ corresponds to values from 0.25 to 0.50, and ‘hope’ — 0-0.25. Anything below 0 is ‘capitulation’.
Stack Funds Research 26 Nov 2020 by ForkLog on Scribd
Bitcoin price entered the ‘belief’ phase in October, after surpassing the 0.50 threshold. In this phase, the market remained throughout 2017, during which Bitcoin’s price rose more than twentyfold.
‘The indicator currently indicates that the market has only recently jumped into a new wave, re-entered the ‘belief’ phase at the end of October. Extrapolating data from the previous bull cycle, even a quarter of the move of 2,250% would point to Bitcoin rising to $86,000 next year,’ the report states.
Many analysts share Stack Funds’ view. Mati Greenspan, founder of Quantum Economics, regards the recent correction as routine.
‘A 17% pullback is quite banal for this stage of the market cycle’.
A 17% pullback is rather tame for this stage of the cycle. #JustSayin pic.twitter.com/NpZWhrOujE
— Mati Greenspan (tweets ≠ financial advice) (@MatiGreenspan) November 26, 2020
Twitter account teklords wrote that the correction was extremely necessary before a new, possibly even more impressive price pump.
#bitcoin
35 day pump. Now cooling off. This pullback is greatly needed. Daily RSI receding to mid level territory.
I have a feeling the the next pump will be even stronger.— teklordz (@teklordz) November 26, 2020
Some market participants believe that the next Bitcoin correction will open good entry points for altcoin traders.
The next major #Bitcoin pullback is going to create some god tier #altcoin spot entries.
— Mayne of Tether (@Tradermayne) November 24, 2020
At the time of writing, the leading cryptocurrency is trading around $17,770. The price has been consolidating for several days after a sharp drop from the $19,000 level.
Earlier ForkLog reported that whales are actively transferring coins from wallets to exchanges. This could herald a new wave of Bitcoin selling.
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