Bitcoin’s price is likely to reach USD 7,000. However, this may be the last drop below USD 10,000 for BTC, according to an analyst.
The price of the main cryptocurrency is currently consolidating below USD 9,200, which has been a key support level since the end of May. According to on-chain data analyst Cole Garner, if BTC falls to the USD 7,000 level, this may be the last drop below USD 10,000 in the long term.
Garner says that Bitcoin is technically still experiencing a technical bullish trend. He considers that a drop below the volume-weighted average price (VWAP) is an excellent opportunity to buy. He noted that it could be the last drop in the price of the cryptocurrency below USD 10,000.
Traders’ Pessimism towards Bitcoin’s Short-Term Trend
Four main factors make analysts cautious about Bitcoin: the increase in the selling pressure from the miners, the uncertainty in the stock market, the consolidation at a pivotal price point, and the decrease in volatility.
However, the fact that miners are selling a large amount of Bitcoin is nothing new in the ecosystem. They have been selling most of their mined coins every day since the halving occurring last May 11th.
The massive sale by miners coincides with other worrying factors, such as the Chicago Mercantile Exchange (CME) Bitcoin market, which is net short. It suggests that professional traders are predicting a temporary pullback in the cryptocurrency.
Garner explained that the CME commitment of traders shows that institutions have been massively net short BTC for many weeks. He said that they have only been this net short once before: the last time that BTC was around the same price.
Data from the Bitcoin options market support this narrative. Last June 26th, the Bitcoin options market experienced the largest expiration in history with options worth USD 675 million. However, Bitcoin’s price did not record a large increase in volatility, which indicates that most options were presented when BTC was in a narrow range between USD 9,000 and USD 10,000.
Currently, the Bitcoin options market is generally net neutral, while the CME futures market remains net short. When combining that with the fact that miners have sold 1,115 BTC more than they had mined since last June 19th, the trend may turn bleak.
Analysts’ Optimism about BTC’s Medium-Term Trend
Garner still predicts a major bullish market to materialize in the long term. In addition to optimistic developments in the industry, such as growing support from Fidelity and institutional adoption, a key macro indicator has lit up.
Besides, hash ribbons, which assess potential capitulation phases among miners in the cryptocurrency market, are signaling an upward trend. Mining capitulation generally marks a local floor for Bitcoin as there is an elimination of over-leveraged miners and investors.
Garner noted that the Bitcoin community is very close to a hash ribbons buy signal. This is one of the highest alpha on-chain signals that the analyst is tracking. As they do not occur often, he hopes that this will be the last one for a long time.
Fundamental factors are becoming stronger and the mining industry is finally recovering from the halving and a two-year high difficulty adjustment. For that reason, traders expect Bitcoin’s price to rebound along with it.
By Alexander Salazar