Key Bitcoin price metric flashes its first bullish signal in 4 months
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The Bitcoin market has been on a rollercoaster over the last year. After peaking at close to $20,000 per coin in December, it has been steadily declining. It now sits around $7,500 per coin. But after months of further decline, a key Bitcoin price metric has flashed its first bullish signal in four months. The Bitcoin daily moving average convergence/divergence (MACD) indicator has shown its first positive crossover between the short- and long-term indicators since June. Bloggers and technical analysts have been watching the indicator closely for signs of a bottom in the market. The last time the indicator showed a positive crossover was in June, when the indicator crossovers were negative. The indicators generally have a greater
The Bitcoin Investment Trust (OTC: GBTC) is the best performing Bitcoin related stock of the year. Since the beginning of the year, the stock has risen 95% to over $160/share. Furthermore, the Bitcoin Investment Trust has outperformed the bitcoin price so far in 2016 by roughly 40%. Why is this important? Because the Bitcoin Investment Trust is one of the few ways for investors to gain exposure to bitcoin, outside of buying the asset directly. This key metric, known as the “bitcoin-dollar” or “BTC/USD” exchange rate, has been range-bound for four months. That is until yesterday when the metric flashed its first bullish signal in four months.
Bitcoin (BTC) has failed to stay above the $53,000 support level over the past three days, while Ether (ETH) has hit a new all-time high of $2,800. In the current scenario, some traders prefer to wait for CME futures to expire on Friday before opening long positions in BTC, as historically the price usually corrects for this event.
Price of ether and bitcoin on Coinbase, USD/ton Source: TradingView
On the other hand, the price of Ether was positively affected by the fact that the European Investment Bank launched the sale of digital bonds on the Ethereum network. The EIB will issue EUR 100 million ($120.8 million) in two-year digital bonds, with Goldman Sachs, Santander and Société Générale taking the lead.
In addition, JP Morgan released a research note last week indicating that Ether is expected to continue to outperform Bitcoin thanks to improved liquidity and online activity.
According to fixed income analyst Joshua Younger:
Bitcoin is more of a cryptocurrency than a currency and competes with gold as a store of value, while Ether is the backbone of the crypto economy and therefore acts more as a medium of exchange. To the extent that owning a stake in this potential company is more valuable.
When we analyze the ratio of users’ net long and short positions on OKEx, we find some surprising data. The indicator is calculated on the basis of consolidated client positions, including open contracts and futures contracts. Ether’s long/short ratio hit its low point in 2021 and is significantly lower than Bitcoin’s.
Ratio between long and short positions in OKEx futures. Source: OKEx
In 2021, long positions in Ether clearly dominated, peaking at 130% more than short positions, while Bitcoin traders were more modest. The reversal of the market trend on the 29th. However, the month of April took place in an environment where the ratio of BTC long positions exceeded short positions by 45%.
Meanwhile, Aether traders have only 6% net long positions, indicating a lack of confidence in the recent rally.
OKEx traders’ positioning on Ether should not be seen as bearish, as the ratio of long to short positions is relatively balanced. However, the monthly trend in April leaves no doubt that bitcoin traders are becoming more optimistic.
Traders should not be deterred by the expiration of BTC and Ether options on Friday. Bitcoin’s $3.9 billion decline poses a risk to bulls if the price drops below $50,000, as bearish neutral puts would then have a $700 million advantage.
Bulls currently dominate the smaller Ether expiration ($930 million), and the $115 million difference in open calls seems assured even if the Ether price drops to $2,600.
However, both cryptocurrencies could see some volatility after Friday’s option expiration at 8:00 GMT and the upcoming CME futures and option expiration at 15:00 GMT.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Cointelegraph. Every investment and every stage of trading involves risk. You should do your own research before making a decision.
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