Market situation: How long will the price of bitcoin remain stable?

Many analysts believe that if bitcoin manages to overcome the resistance of $ 40,000, it will create conditions to reduce sales pressures and further price jumps; But why is this level so important for changing market trends in the short term?

According to Kevin Desk, after the sharp decline in January, the digital currency market has been entering a phase of price stabilization for some time. Many analysts expect the price of digital currencies to recover somewhat this month; Especially considering that in the last few weeks some altcoins have performed better than bitcoins.

The bitcoin market has been almost volatile for the past 24 hours. Atrium has experienced similar conditions and the price of Solana has risen by 3.5%. The token market Decentraland and The SandBox also declined after a jump on Monday, with both tokens falling nearly 5 percent in the last 24 hours.

Yesterday, Indian Finance Minister Nirmala Sitaraman announced for the first time that the government intends to impose a 30% tax on revenues from digital currency transactions. “India is finally on the path to legalizing digital currencies,” said Nishal Shetty, CEO of WazirX, one of India’s largest digital currency markets. Of course, this news did not have a significant impact on the market situation.

Analysts expect the psychological pressure of digital currency legislation to ease in the short term; An event that can strengthen the feelings of traders. For example, the index of fear and greed in the digital currency market is slowly rising above the level of “extreme fear”, which may be a sign of an upward trend for traders. There are also signs of short selling in the bitcoin futures market. Loan sales occur when short traders are forced to leave their trading positions due to a sudden rise in market prices.

Currently, some buyers continue to buy with lower prices on the floor. The software company Microstrate, which regularly accumulates bitcoins, announced yesterday that it had purchased 660 new bitcoins worth $ 25 million between December 30 and January 31.

Technical indicators show that the potential jump in the price of bitcoin between $ 40,000 and $ 45,000 will be stopped; Because the current acceleration in prices does not seem to be enough to form a long-term move.

Improve the feelings of traders

The index of fear and greed of the digital currency came out of the zone of extreme fear last week, which shows that the downward mood is weakening. This index has already reached the levels of July 2020 (July 99); When the process of recovery in the digital currency market had not yet begun.

The Arcane Research Institute wrote in its report yesterday:

On Sunday this week, the index of fear and greed reached a level of 30% in a short period of time, which is the highest level since the beginning of 2022.

Market situation: How long will the price of bitcoin remain stable?
Index of fear and greed for digital currencies

There are some analysts who prefer to wait for the volume of trade to confirm the change in the feelings of traders from swords to bulls.

Arkan Research said:

The bitcoin market is currently struggling with $ 40,000 resistance and is trying to break that level. Maybe [با عبور قیمت از این سطح] Witness a sharp increase in trade volume; Just like when bitcoin fell below $ 40,000. Until then, there will be no noticeable trade activity; This is because impulse traders (those who trade depending on price fluctuations) wait for specific price movements once they enter trading positions.

Investigate the possibility of short-term price spikes

Bitcoin needs to break the $ 40,000 resistance to make a significant amount of short liquid trading positions. As can be seen from the chart below, the volume of liquidated long (buying or rising) trading positions has recently decreased; This usually happens before price jumps and as a result of widespread liquidation of short positions or the formation of pressure to sell debt.

Liquidation occurs when an exchanger completely closes the trader’s leverage trading position to prevent the original amount due to the trader from being burned. In fact, trading platforms do not allow the balance of the trader’s account to reach less than his debt. This happens mainly in the futures markets.

The Glassnode analysis platform also writes in its new report:

Given the negative sentiment of traders, the high use of trade leverage and the predominance of short trading positions, the formation of pressure on sales of short-term loans against the current market direction seems logical.

Market situation: How long will the price of bitcoin remain stable?
Comparison of the share of long and short positions in liquidated market positions

Market status after publication: How long will the price of bitcoin remain? appeared first for currency.

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