Bitcoin’s price is currently displaying a potential bullish divergence, hinting that the 6% decline observed could undergo a reversal. Despite a report from Matrixport suggesting the SEC might reject spot BTC ETF applications, senior Bloomberg ETF analyst Eric Balchunas discredited the claim, stating they have “heard nothing to indicate anything but approval.” The cryptocurrency market experienced a dip on Thursday following the release of the Matrixport report, causing a momentary panic among investors. Initially, the report portrayed a negative outlook on Bitcoin’s price and ETF approval, but Matrixport later contradicted itself by asserting that BTC was poised to reach $50,000.
Market Recap: Bitcoin Price Plummets Following Matrixport Report
The report, titled “Why the SEC Will Reject the Upcoming Spot BTC ETF Applications,” served as the catalyst for the market crash. Naturally, any report undermining the market’s bullish sentiment is likely to elicit a response from investors, as evidenced by the 6.5% decline.
Despite the downturn, the scheduled approval date remains unchanged, set between January 8 and 10. Consequently, reports suggesting otherwise are considered largely noncredible. Balchunas emphasized that it’s not just him and James Seyyfart maintaining an optimistic outlook, but the entire crypto market.
This collective optimism is reinforced by mainstream media, which refrains from reporting on crypto developments until information is solidified, aligning with a similar positive perspective.
As time progresses and the probability of approval rises in the coming days, there exists a significant opportunity for the Bitcoin price to recover to $45,000 and potentially ascend even higher.Technical
Technical Analysis: The potential for a Bitcoin price rally is evident.
Despite undergoing a correction, the Bitcoin price continues to exhibit a significant pattern on the charts, typically linked with a bullish outcome. The formation of a bullish divergence occurred as the price established higher highs and higher lows, contrasting with the Relative Strength Index (RSI), which formed lower lows and lower highs.
A positive aspect is that, even after Wednesday’s decline, the altcoin remains above the uptrend line, treating it as a support level. Losing this line would potentially negate the bullish thesis, causing the Bitcoin price to head towards $40,000.
Should the bullish divergence unfold as anticipated, BTC is poised to sustain its upward trajectory and rebound to trade at $45,000, with the window of opportunity still open.
Frequently Asked Questions about Cryptocurrency Metrics
What does the term “circulating supply” mean?
The total number of tokens available for a cryptocurrency is determined by its developer or creator. A specific quantity of these tokens can be generated through methods like mining, staking, or other designated mechanisms, as outlined by the underlying blockchain technology’s algorithm. For instance, since its creation, a cumulative total of 19,445,656 BTCs have been mined, representing the circulating supply of Bitcoin. Conversely, circulating supply may decrease due to actions such as token burning or unintentionally sending assets to addresses on incompatible blockchains.
Can you explain what market capitalization is?
Market capitalization is derived by multiplying the current market value of a specific asset by its circulating supply. In the case of Bitcoin, as of the start of August 2023, the market capitalization exceeds $570 billion, calculated by multiplying the circulating supply of over 19 million BTC by the prevailing Bitcoin price of approximately $29,600.
Can you elaborate on the concept of trading volume?
Trading volume represents the overall quantity of tokens traded or exchanged for a particular asset during a designated trading period, typically 24 hours. This metric is crucial for assessing market sentiment and encompasses all transaction volumes on both centralized and decentralized exchanges. A rise in trading volume often indicates increased demand for a specific asset, reflecting heightened buying and selling activities within the cryptocurrency market.
Can you explain the concept of funding rate?
Funding rates are a mechanism crafted to incentivize traders to assume positions and maintain alignment between perpetual contract prices and spot markets. This concept establishes a framework on exchanges to guarantee regular convergence of future prices and index prices through periodic payments. A positive funding rate indicates that the perpetual contract price exceeds the mark price, leading bullish traders with long positions to compensate bearish traders with short positions. Conversely, a negative funding rate signifies that perpetual prices are lower than the mark price, resulting in traders with short positions compensating those with long positions.