Bitcoin Hints Bullish, But Why It’s Far From Fresh Rally
Bitcoin continues with its crab-like price action as it moves around $45,000, and $50,000. As of press time, BTC’s price trades at $46,854 with 4.2% losses in the last day.
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Operators seem to expect more profits in the short term as Bitcoin has historically seen gains at the end of every year. However, BTC’s price could remain rangebound for at least early 2022.
After December 3rd crash into the lows at current levels, Bitcoin has struggled to maintain stability and has seen an increase in volatility. This could be the result of the violent move to the downside.
In the coming weeks, data from Jarvis Labs suggest BTC’s price could regain some stability. The firm shared some indicators and their predictions for what could be in play as the year wraps up.
According to Jarvis Labs Wealth Multiplier, a metric used to measure the period when buyers choose to cash in their funds at a loss or profit has been recording higher lows as it diverges with BTC’s price suggesting appreciation. This dynamic could be pointing at less volatility for Bitcoin.Source: Jarvis Labs via Twitter
This matches with Jarvis Labs’ Price versus Circulation Ratio indicators which suggest the BTC has been very active in the past months. Standing at around 0.3, this metric needs to bottom at around 0.2 if the bulls want to reclaim momentum, as at the beginning of 2021.
At that time, the Price versus Circulation Ratio was also coming in from a high above 0.3 in Q4, 2020, and made a sharp drop as the end of the year approached. This led to a massive rally in the subsequent months.
The firm also records an increase in its accumulation pattern indicators suggesting retail investors have been buying the dip in the past 7 days. This metric also suggests large investors have been more active at current levels.
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Moving on to the derivative sector, Open Interest across the board was smashed during the last crash. Jarvis Labs records a significant drop in their OI/Market Cap ratio for Bitcoin suggesting a reduction in leverage positions.Source: Jarvis Labs via Twitter
In past months, the market was over-leverage and susceptible to liquidation cascades, when BTC’s price moved quickly to either direction. This is always an obstacle for bullish momentum continuation as Bitcoin is less free to climb into uncharted territory. Jarvis Labs said:
If this (Open Interest/Market Cap) starts rising while the price consolidates, that will likely be bullish due to a short squeeze possibility.
As NewsBTC reported, this scenario seems like the most plausible given current market conditions and low resistance at upper levels until $53,000. At this price, as Jarvis Labs claimed, a lot of short-term holders realized profits and it must be flipped into support for a convincing bounce.
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Jarvis Labs still believes funding rates across exchanges, especially on Binance, must turn negative before a fresh rally get enough fuel. Thus, why Bitcoin could still see some downside in the short term and a red Christmas. The firm added:
BTC sits below Short-term holder price (53k) and that level needs to be recovered soon. Chop market for now. Potential route for BTC is 49k ->42(44k) ->54k.