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Bitcoin broke $40,000 in a strong recovery rally over the past three days as BTC could stabilize above the key level in the foreseeable future.
The price of Bitcoin (BTC) broke above $40,000 on Feb. 6 for the first time in 23 days. But this time, the market sentiment is a lot calmer with a less overheated derivatives market.
The combination of a less crowded Bitcoin futures market, the selling pressure from whales peaking, and a fast recovery could help BTC stabilize above $40,000 this time.
This means that the selling pressure coming from whales dealing with $1 million to $10 million orders reached a record-high. The analyst said at the time:
Bitcoin exchange data with whale orders (brown line). Source: Material indicators
If the price of Bitcoin establishes $40,000 as a new support area, it would establish a highly positive short-term price trend for BTC.
It would mean that BTC can now rally towards its all-time high without the massive selling pressure coming from major whales and high-net-worth investors.
In the near term, for Bitcoin to maintain its bullish structure, it would need to protect two key support levels: $40,000 and $37,834.
Meanwhile, according to the analysts at Whalemap, a data analytics platform that tracks whale data, there is a confluence of whale supports at $37,834 and $36,290.
If Bitcoin breaks down from $40,000, these two support areas would be critical to defend. Below these two levels would likely result in a short-term bearish trend. The analysts wrote:
Whale cluster support levels. Source: Whalemap
Scott Melker, a cryptocurrency trader, said there will be pullbacks, but Bitcoin would likely reach $63,000 following the breakout. He said:
A potential catalyst in the near term could be Guggenheim potentially confirming its investment in Bitcoin after securing the rights to invest in the Grayscale Bitcoin Trust in February.
The price of Bitcoin (BTC) broke above $40,000 on Feb. 6 for the first time in 23 days. But this time, the market sentiment is a lot calmer with a less overheated derivatives market.
The combination of a less crowded Bitcoin futures market, the selling pressure from whales peaking, and a fast recovery could help BTC stabilize above $40,000 this time.
Bitcoin recovers quickly after whales finish selling
On Jan. 29, a pseudonymous Bitcoin researcher and analyst known as “Material Scientist” said that “mega whale” order flow reached an all-time high.This means that the selling pressure coming from whales dealing with $1 million to $10 million orders reached a record-high. The analyst said at the time:
If the price of Bitcoin establishes $40,000 as a new support area, it would establish a highly positive short-term price trend for BTC.
It would mean that BTC can now rally towards its all-time high without the massive selling pressure coming from major whales and high-net-worth investors.
In the near term, for Bitcoin to maintain its bullish structure, it would need to protect two key support levels: $40,000 and $37,834.
Meanwhile, according to the analysts at Whalemap, a data analytics platform that tracks whale data, there is a confluence of whale supports at $37,834 and $36,290.
If Bitcoin breaks down from $40,000, these two support areas would be critical to defend. Below these two levels would likely result in a short-term bearish trend. The analysts wrote:
What comes next?
In the foreseeable future, some traders anticipate Bitcoin to surge beyond $60,000 with the momentum from the ongoing rally.Scott Melker, a cryptocurrency trader, said there will be pullbacks, but Bitcoin would likely reach $63,000 following the breakout. He said:
Bitcoin technically broke out of the bull flag when it surpassed $38,000 on Feb. 4. Considering that Bitcoin is looking stronger than the last time it broke $40,000 a month ago, there is sufficient momentum to carry it past $50,000 this time around.
A potential catalyst in the near term could be Guggenheim potentially confirming its investment in Bitcoin after securing the rights to invest in the Grayscale Bitcoin Trust in February.
