Bitcoin (BTC) saw a significant resurgence over the past few hours after hitting the lowest price since June 21 at $28,641 yesterday. At press time, BTC has experienced a 3.7% hike from its low. In fact, BTC even brushed past the $30,000 mark, indicating a substantial shift in market sentiment. So, the question begs.
Why Is Bitcoin Up Today?
“The entire short build-up of the past couple days just got wiped,” tweeted analyst Byzantine General. Data from Coinglass backs this claim and shows that BTC short positions amounting to $27.8 million were liquidated yesterday, followed by an additional $13.45 million today. This accounts for the most significant short liquidation since July 14, undeniably playing a significant role in the current price movement.
But perhaps the most influential reason for the sudden shift in market sentiment was MicroStrategy’s recent announcement. The company stated that it will conduct stock sales worth $750 million. After the announcement, the Bitcoin community was abuzz with speculation that Michael Saylor might make additional, gigantic BTC purchases.
“As with prior programs, we may use the proceeds for general corporate purposes, which include the purchase of Bitcoin as well as the repurchase or repayment of our outstanding debt,” said Andrew Kang, MicroStrategy’s CFO during a recent earnings call. While it remains unclear if the entire proceeds will be funneled into Bitcoin, the likelihood of a substantial chunk is certain. Directly after this announcement, Bitcoin surged by 1.6% within one hour.
On-chain analysis firm Santiment tweeted: “Bitcoin has breached back above $30k once again, with assistance from the many traders who capitulated during the past week of price declines. Volume is rising to kick off August, & this psychological resistance cross may shift sentiment positive.”
The chart shared by the firm shows that yesterday trading volume picked up steam again, rising to the highest level since six weeks. Also, the lowest amount of profit / loss taking in 7 months indicates a capitulation event.
Analyst @52Skew added that the Bitcoin on the Binance spot market experienced a “real spot demand” which he wanted to see for a strong price reaction. “Note the limit bid wall that pushed up price; typical with PvP conditions to force limit chasing. Marked notable liquidity on the orderbook,” the analyst stated.
What’s Next?
However, he also cautioned that the 4-hour chart is so far looking like a classic Swing Failure Pattern (SFP) into a higher time-frame support / resistance. The Swing Failure Pattern, or SFP, is a type of reversal pattern where traders target stop-losses above a key swing low or below a key swing high to manipulate the price direction by generating enough liquidity.
Nevertheless, the market appears to be brimming with anticipation. As per @DaanCrypto: “If price starts ranging here I’d look for another sweep of the lows and consolidation there. $28.5 & 29.5K are the areas of interest.” Meanwhile, a break above the resistance zone at the monthly and weekly open between $29,236 and $29,300 would validate a bullish scenario where the price targets $30,000.
At press time, BTC wasn’t able to reclaim the red resistance zone and was trading at $29,606.
Featured image from Kanchanara /Unsplash, chart from TradingView.com