- Despite a correction of $1,000, Bitcoin can close above the important support of $13,200.
- A historically reliable indicator shows that the current rally could just be the beginning of another uptrend.
Bitcoin has shown a strong rally in recent weeks and most recently showed a new local all-time high in 2020 of USD 13,885. Shortly thereafter, the Bitcoin price fell just under $1,000, but was able to attract new buyers within a short period of time, allowing BTC to stabilize above the important support level of $13,200. At the time of going to press, the Bitcoin share price stands at $13,271. The market capitalization has fallen to $245 billion.
Blockroot founder and Bitcoin trader Josh Rager explains that Bitcoin must overcome the strong resistance along the $13,880 mark and that another strong uptrend could follow. He considers yesterday’s correction to be healthy for further development, because just then the price increase will be sustainable. Nevertheless, he advises his followers to work with smart stop-loss orders. The uncertainty due to the corona pandemic is also reflected in the trading behavior of some investors.
https://twitter.com/Josh_Rager/status/1321215475804753921
Other analysts see the $13,000 mark as an important support that must be maintained in order for Bitcoin to capitalize on the current momentum and continue to grow. Bitcoin Trader George also states that he will increase his long positions if Bitcoin can close above this support on the daily chart.
LTF. Wick into grey would be nice / healthy imo, wanna see quick buyback from there.
Lose grey and I'll be fully out of longs. pic.twitter.com/xW7xg8yq1h
— George (@George1Trader) October 27, 2020
“Jonny Moe”, on the other hand, believes that Bitcoin will initially go through a major correction phase and the price will drop to $12,000. As long as Bitcoin continues to move sideways in the price range between $13,000 and $13,900 over the next few days and weeks, there are no clear technical signals that point to a different trend or further price increase.
I'm looking for a secondary thrust to come out of this current consolidation up near the $13.9 range, followed by a retrace back to $13k before we consolidate in this range further.$BTC pic.twitter.com/ZoeTqdNiNw
— Jonny Moe (@JonnyMoeTrades) October 26, 2020
An indicator designed by Glassnode indicates that the BTC price will continue to rise. The so-called MVRV Z-Score measures the deviation of the market value from the realized value and is mainly used to assess whether an asset is overbought or not. At this point in time, the Z-Score indicates that the current rally has just begun. Historically, a MVRZ Z value below zero has indicated a bear market low.
A value above 7, on the other hand, indicates that a bull market will soon be over. This indicator has always been reliable for the previous years, but is nevertheless highly controversial in the community. Currently, the Z-value is at just under 2, so that a further upward trend could follow.
Current hype driven by institutional investors
Despite the continuing bullish sentiment, experienced trader Nick Cote warns against losing sight of the technical indicators. In his opinion, the price increase was also caused by the hype surrounding PayPal, MicroStrategy and Square. The current gains can be taken, but a sharp correction could follow in the near future:
In a trending market, indicators such as the RSI can remain in an ‘overbought’ or ‘oversold’ state for extended periods of time. For bitcoin, institutionalization is the primary driver for growth in this next bull market. As such, it’s better to observe on-chain metrics.
