Bitcoin Price Dips To $43,200: Buy Or Sell Now? Analyst Predicts Trend
December 08 2023 - 6:00AM
NEWSBTC
Amidst a week of significant volatility in the cryptocurrency
sphere, the Bitcoin price has been a focal point, especially
following a dip below $43,200 today. After climbing to $44,533 on
Tuesday, the price has since entered an ascending channel, touching
a local low of $42,835 on Thursday. This trend has sparked a
critical debate: is this a sign of an impending major correction
following Bitcoin’s 65% rise in the past seven weeks, or is it a
temporary bear trap in a continuing bullish market? Adam Cochran,
partner at CEHV, has offered an in-depth analysis of the current
Bitcoin market situation. Bitcoin Price Poised For Further
Downside? Via X, Cochran began by assessing the market’s reaction
to the recent price dip, “I was trying to decide if we were at
‘euphoria’ yet and due a major correction versus a mild pullback.
But on this pullback, too many people went from ‘wgmi’ to ‘take
money off the table’. In real euphoria, people just yolo every dip.
This looks healthy + bullish.” This observation indicates that the
market’s response to the price dip is not indicative of the
‘euphoria’ typically seen before a major market correction,
suggesting a more stable and bullish sentiment. Further, Cochran
delved into the intricacies of the futures market, noting the
increase in Open Interest (OI) on the Bitcoin side and the
decreased basis, signifying a move towards market equilibrium.
Related Reading: Sam Altman-Backed Crypto Startup Looks To Secure
$100 Million For Bitcoin Private Credit Fund He elaborated “On the
BTC side, OI has increased while the basis has decreased, meaning
the market has come a bit more towards equilibrium on futures.”
This is a significant indicator of the market’s health. Cochran
also examined the relationship between perpetual futures prices and
spot prices. He remarked, “We’ve also got the perpetual futures
price trading a bit above spot, which we’d expect, and it’s not
overly optimistic – which is healthy.” This indicates a cautiously
optimistic market, avoiding the extremes of pessimism or irrational
exuberance. In his analysis, the crypto analyst also emphasized the
potential impact of Spot Exchange-Traded Funds (ETFs) on the
market. He asserted, “Bitcoin is limited. Bitcoin futures are not.
At the end of the day, 1 BTC > 1 BTC Perp.” This highlights the
significance of the finite nature of Bitcoin compared to the more
flexible futures market. The introduction of ETFs, which are
required to buy spot Bitcoin, could significantly affect market
liquidity and dynamics. The Most Important Bit Is What’s Missing
Cochran claims that the pre-rally started with healthy buying
between $16,000 to $18,000 support, then the rally got fueled by
“bears being destroyed” and extended by refreshed spot buying,
while earlier buyers did not distribute their coins. Related
Reading: Why Bitcoin’s Staggering 260% YTD Surge Could Be Just The
Start “But the most important part is actually what’s missing,”
according to Cochran, who added “ETF buyers haven’t started buying
yet. Retail buyers haven’t started buying yet. BTC didn’t break
below the $42k support. BTC, a nearly $1T asset, is up 157% on the
year, and retail inflow hasn’t even started yet.” These
observations indicate that the Bitcoin rally has potentially much
more fuel in the tank left. Cochran concluded: Imagine this: Next
year Boomers sit down with their financial planner. They look at
their 60/40 portfolio with a 5 year performance of 5%. They’ve just
read about Bitcoin up 157% on the year nearing ATHs. Why wouldn’t
they diversify 1% into this new BTC ETF? […] My hunch is even at
these levels, any spot buying will be deeply in the money this time
next year. In the short term, however, one thing is crucial: the
BTC price must break out of the ascending trend channel in the
lower time frames in order to trigger new upward momentum. Featured
image from iStock, chart from TradingView.com
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