Crypto analyst Ardi has pointed to a bear market divergence to explain what is going on Bitcoin’s price for some time now. His analysis comes just as BTC continues to struggle to stay above $70,000 amid the US-Iran war and rising oil prices.
Analyst Explains What Happens to Bitcoin as Price Fight Heats Up
In one X messageArdi noted that this is the first time in this bear market that Bitcoin’s price and open interest have diverged on an intermediate time frame. BTC has risen to a low of around $60,000 over the past six weeks his open interest has decreased during the same period. He stated that this indicates that the recent rally was not driven by new buyers, but rather because it consisted largely of shorts closing out their positions.
Related reading
The analyst further noted that traders were shorting the Bitcoin summit like saw the drop to $60,000 and thought it was a good position to take profits. “They locked in the profits. They got out. That exit pressure pushed the price up,” he said. However, Ardi added that this development is not the same as the new demand, which is enough for a turnaround.
He said open interest typically rises when the Bitcoin rally is really strong, as shorts close and longs open to replace them. In the meantime, new capital is coming in, which forms the basis for the bullish reversal in BTC. Ardi stated that none of that happened in this range, with trading activity being one-sided even as the leading crypto climbed to $75,000 last week.
Ardi said the problem is that short covering has a ceiling, and once the last short is closed, the source of upward pressure is gone, leaving no other factor supporting the move upward.
How things could work out for BTC in the short term
Crypto analyst Colin noted that Bitcoin has been tracking in a bear flag channel since the February 6 low. In line with this, he meant it BTC will eventually go bankrupt and that it is not a question of if, but when. The analyst also wondered how high the leading crypto will rise before being hit by this slump.
Related reading
Colin believed that the highest price Bitcoin could reach before this expected collapse is around $80,000. He described this as the best-case scenario at this point and that BTC might not even reach this psychological level. However, the analyst also admitted that there are some outliers, such as BTC rising above $80,000 as the War between the US and Iran ends suddenly.
At the time of writing, the Bitcoin price is trading around $70,700, up in the past 24 hours. facts from CoinMarketCap.
Featured image from Getty Images, chart from Tradingview.com