The comments came after BTC/USD plunged by more than 20 percent from its year-to-date high of $12,486. The downside correction followed a 200 percent price rally, hinting that traders merely locked their profits at local tops. Nevertheless, the bearish move also coincided with a similar drop across the US stock and gold markets.
Many observers feared that BTC/USD would extend its downside momentum to hit $9,600 or the levels below it. The pair, however, managed to secure a base above $10,000, its previous resistance level now acting as a support level.
Phi also backed its bullish bias with a stable institutional and miner activity in the Bitcoin market. The portal said that the $900m Grayscale Invesments–a New York-based crypto investment firm–raised in Q2 wouldn’t be available for exiting until at least October 1st.
Meanwhile, it highlighted recoveries in both Bitcoin’s hashrate and mining difficulty. Meanwhile, the end of miner capitulation also pointed towards a sustained BTC/USD bull run.
“With miner capitulation historically marking market bottoms, this is a bullish long-term sign,” Phi wrote.
The portal added that the Bitcoin Futures market is now repeating its March 2020 fractal. Back then, there were ridiculous amount of long positions open at $7,800 that led to a “Long Squeeze.” In the recent scenario, bulls had a similar exposition to $11,300, a level that also pushed them to the wrong end of the trade. Excerpts:
“Currently, the margin market is overly bearish, but not enough people are on board with the “bearishness” so we do need the open interest to pick up a bit to fuel an ideal short squeeze. As for the CME institutional traders’ positions, last week’s drop doesn’t impact this group turning bullish after 3 months of indecisiveness.”
Phi also reminded traders of the long-term impacts of inflation on the Bitcoin market. The portal said that the Federal Reserve’s commitment to raising inflation beyond their ideal target of 2 percent would keep investors glued to Bitcoin for its hedging characteristics.
“This will fundamentally push up the value of gold, bringing up bitcoinalong the way as the main value proposition of bitcoin remains a store of value rather than remittance,” it added.
BTC/USD was trading at $10,279 at the time of this writing, down 0.87 percent into the Tuesday session.
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