The first cryptocurrency by market capitalization has stuck in the $48,000-$50,000 region since last week.
The price action confuses traders as bullish momentum has peaked, at least in the short term.
Jarvis Labs analyst Ben Lilly published recently a report on the crypto market. As seen below, in the Bull-Bear Cycle index developed by Jarvis Labs, the “fair value” indicator, the orange line on the chart, dropped below the blue line around May 2021.
This suggests that the market remains in a downtrend. Although the orange line increased in July, signaling bullish momentum, it remains below the blue line.
This indicates that the BTC price “has not fully recovered yet“, said the analyst, adding that “there is still some ground to cover before bitcoin is in a bull market.”
In addition, Jarvis Labs tried to find correlations between Bitcoin and its supply circulation levels, ie the percentage of coins being exchanged. Measures BTC liquidity.
As seen below, in the Price vs. Circulation ratio, shown with the pink line, in late 2020 the percentage of Bitcoins changing hands increased to late 2017 levels when the BTC price reached $20,000.
This drove the first cryptocurrency by market capitalization to a massive rally that peaked at $64,000. However, the circulation rate (pink line) started to decrease when the market entered 2021 and is currently signaling a “sell” (red line).
Thus, indicators suggest a possible new bears attack in the near term. Ben Lilly believes there are “some” similarities to the current price and the 2013 bull run, but he’s not sure Bitcoin could make an equally powerful move upwards. The analyst stated:
What I find interesting here is that it coincided with the last attempt to recover a new peak. Which means if bitcoin doesn’t make a new high next month, we could run into problems.
Why Bitcoin Bulls May Have Trouble Returning to Previous Highs
In support of the bulls, Ben Lilly indicated that there has been a large buildup of Bitcoin as the cryptocurrency has climbed from its low of $30,000 in recent months.
These investors are trading cash, as suggested by the funding rates in the BTC futures market. Unlike the previous high that drove the price of BTC to an all-time high, this time funding rates are neutral.
As a result, the market is less susceptible to a “cascade of liquidations” that could precipitate a sudden drop. However, Bitcoin whales are currently struggling to determine which side, up or down, will dictate future price actions.
At the moment, the analyst said, indicators appear to be on the corner of bears. Bulls should keep BTC price above key support levels and maintain their position in case of a new low attack . Ben Lilly said:
In short, the market is not convincing me that a new ATH is in the cards right now. I would like to see bitcoin go above 200d MA (about $45,000). And if I test again, I would like to see a strong rebound to at least $53,000.