Aaryamann Shrivastava
FXStreet
- Bitcoin price is observing a potential bullish divergence, suggesting the 6% decline of the day could be reversed.
- A random report from a source known as Matrixport suggested that the SEC could reject the spot BTC ETF applications.
- Senior Bloomberg ETF analyst Eric Balchunas discredited this report, saying they have “heard nothing to indicate anything but approval.“.
Bitcoin price took a hit on Thursday, which resulted in the entire crypto market noting a dip. The sudden drop in price was nothing but a panicked reaction from the investors thanks to the emergence of a report from Matrixport. The publication took a negative stance about Bitcoin and price and ETF approval at first, which was soon countered by themselves, claiming BTC was headed to $50,000.
Daily Digest Market Movers: Bitcoin price crashes after Matrixport report
The report, which was also the reason for the crash, was titled Why the SEC Will Reject the Upcoming Spot BTC ETF Applications. Naturally, any report countering the bullishness of the market is bound to trigger a reaction from investors, and that is what there is to say with the 6.5% decline.
The scheduled approval date is still the same, targeted between January 8 and 10., which basically means that the creative reports suggesting otherwise are mostly noncredible. Balnchunas noted that at this point, it is not just he and James Seyyfart who are holding out an optimistic outlook but the entire crypto market.
This is because mainstream media, which does not report on developments in the crypto space until the information is cemented, is also holding a similar opinion.
At this point saying SEC rejecting it isn’t just going against @JSeyff and I like it was in the early days, now you basically saying multiple mainstream news reporters w multiple sources on inside of this also have it wrong too. Not saying it’s imposs (again we still ‘only’ at…
— Eric Balchunas (@EricBalchunas) January 3, 2024
As time moves forward and the likeliness of approval increases over the next few days, there is a considerable chance for the Bitcoin price to reclaim $45,000 and rise further.
Technical Analysis: Bitcoin price is open to a rally
Bitcoin price, despite the correction, is still satisfying a crucial development on the charts, which is generally associated with a bullish outcome. The Bullish divergence formed when the price formed higher highs and higher lows, while the Relative Strength Index (RSI) formed lower lows and lower highs,
One good development is that despite the decline on Wednesday, the altcoin is still keeping above the uptrend line, treating it as support. Losing this line would certainly invalidate the bullish thesis and send Bitcoin price towards $40,000.
BTC/USD 1-day chart
But if the bullish divergence is executed successfully, BTC will continue its uptrend and recover to trade at $45,000, not too late now.
Cryptocurrency metrics FAQs
What is circulating supply?
The developer or creator of each cryptocurrency decides on the total number of tokens that can be minted or issued. Only a certain number of these assets can be minted by mining, staking or other mechanisms. This is defined by the algorithm of the underlying blockchain technology. Since its inception, a total of 19,445,656 BTCs have been mined, which is the circulating supply of Bitcoin. On the other hand, circulating supply can also be decreased via actions such as burning tokens, or mistakenly sending assets to addresses of other incompatible blockchains.
What is market capitalization?
Market capitalization is the result of multiplying the circulating supply of a certain asset by the asset’s current market value. For Bitcoin, the market capitalization at the beginning of August 2023 is above $570 billion, which is the result of the more than 19 million BTC in circulation multiplied by the Bitcoin price around $29,600.
What is trading volume?
Trading volume refers to the total number of tokens for a specific asset that has been transacted or exchanged between buyers and sellers within set trading hours, for example, 24 hours. It is used to gauge market sentiment, this metric combines all volumes on centralized exchanges and decentralized exchanges. Increasing trading volume often denotes the demand for a certain asset as more people are buying and selling the cryptocurrency.
What is funding rate?
Funding rates are a concept designed to encourage traders to take positions and ensure perpetual contract prices match spot markets. It defines a mechanism by exchanges to ensure that future prices and index prices periodic payments regularly converge. When the funding rate is positive, the price of the perpetual contract is higher than the mark price. This means traders who are bullish and have opened long positions pay traders who are in short positions. On the other hand, a negative funding rate means perpetual prices are below the mark price, and hence traders with short positions pay traders who have opened long positions.
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