Bitcoin Holds Steady Amid Cash-and-Carry Trades and Whale Stability
Summary:
Bitcoin (BTC) has been consolidating within a roughly $5,500 range over the past few weeks and it is being driven primarily by the rise of Cash-and-Carry trades, stable holdings by Bitcoin whales, and prevailing technical patterns. The static price trend is also impacted by the recent surge in inflows into U.S.-based Bitcoin exchange-traded funds and short sales in CME futures. Despite an impasse between market bears and bulls, Bitcoin's bias remains skewed to the upside with a potential for a major breakout. However, any drastic downturn could see a significant price correction.
Bitcoin (BTC) has been hovering within a range of approximately $5,500 for the past few weeks, with its value on June 13 estimated at roughly $67,500. Its value has oscillated between $72,000, its resistance point, and $66,350, its support point, since May 21. Although there have been multiple attempts to exceed a record high to reach $73,800, traversing beyond this limit has proven unsuccessful to date. Analysis of BTC/USD daily price chart originates from TradingView.
The persistence of Bitcoin's static price trend is primarily attributed to growth in Cash-and-Carry trades, with bullish US Spot ETFs positions and deferred positions in CME futures. Additional factors include unchanging reserves of Bitcoin whales and the presence of a dominant technical mode, establishing this consolidation.
Similarly, in light of cash-and-carry arbitrage strategy, Bitcoin's price has remained immobile. This process embodies acquiring a neutral market stance by procuring BTC in the spot market while concurrently vending its future contracts when traded at a premium.
Significantly, inflows into American spot Bitcoin exchange-traded funds magnified to about $15.51 billion on June 13, climbing from roughly $870 million on Jan. 12, when initially introduced. This signifies ETFs as tools for procuring long-spot exposure to the Bitcoin market.
In contrast, hedge Funds record net short positions within CME Bitcoin and Micro CME Bitcoin markets worth $6.33 billion and $97 million respectively. This synchronizes with rapid amplification in market dominance and open interest.
The ascent of cash-and-carry trades, along with futures shorting on the CME Group exchange, have lessened buy-side ETF inflows' impact considerably, stabilizing market prices of recent weeks.
Simultaneously, constancy within the Bitcoin market corresponds with balanced holdings among Bitcoin's most significant whale groups holding a minimum of 100,000 BTC. Meanwhile, smaller whale groups with reserves of 10,000-100,000 BTC and 1,000-10,000 BTC offset each other's actions.
Technical analysis suggests Bitcoin's recent range-bound trend is part of a cup-and-handle pattern. This pattern comprises a U-shaped price drop, followed by recovery and a consolidation period. Typically, the pattern concludes post neckline resistance level price breakthrough, surging to near the maximum difference between the bottom of the cup and the neckline.
Indications on June 13 were of BTC price consolidation within its cup-and-handle pattern, symbolized by 48.43 daily relative strength index (RSI) reading within the neutral 30-70 zone. This reflects an impending tug-of-war between bears and bulls over the upcoming market direction.
Despite this, inclination remains towards a positive Bitcoin bias, pending a breakout surpassing its neckline resistance of approximately $71,500. If this breakout eventuates with expanding trading volumes, primary projections for BTC/USD pair coming month could reach up to $88,000.
However, a retraction from the neckline could reject the cup-and-handle breakout setup, potentially engaging BTC in a correction cycle towards its present support of around $67,000 - the 50-day exponential moving average (EMA; red wave) by June.
A decisive 50-day EMA breakdown could push down the price towards the 200-day EMA (blue wave) at approximately $57,180, marking nearly 15% depreciation from current price levels.
It is important to note this information does not represent investment advice or recommendations. Any investment or trading decision holds risk, so individuals should conduct appropriate research before deciding.
Published At
6/13/2024 3:28:29 PM
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