Bitcoin Bull Market Not Over After $30K Crash Dismantles Leverage – Cryptovibes.com – Daily Cryptocurrency and FX News

Bitcoin (BTC) is still ‘halfway’ through the current bull market and the price dip that happens earlier this week turned out to be a ‘win’ for the hodlers, based on a study by on-chain analyst Willy Woo.

In his latest market updates that are publicly accessible, the famous statistician highlighted many factors that suggest bitcoin is not yet bearish.

Bitcoin recovered massively from its lows of $30,000 on May 19, preserving its gains after the steepest recovery in its history. Woo wrote:

“Are we in a bull market? Long-range macro indicators like the NVT ratio are very healthy, that remain unchanged. So yes, this is not a mania top which all BTC bull markets end in, price is BELOW fundamentals, not above it. We are still halfway.”

The normal end of a bitcoin bull run is a mania top and it has not appeared so far. Thus, fundamentals are unchanged in their outlook. The network value to transaction (NVT) ratio is a popular metric that aims at determining profitability among the hodlers. Based on reports from earlier this week, even before the latest dip, NVT was showing a buying opportunity at price levels near $42,000.

NVT price that Woo describes as “organic” valuation of Bitcoin still hovers around $55,000. This valuation together with stock-to-flow-based projections of $60,000 says that Bitcoin is significantly undervalued.

The biggest crypto might already have the tools it requires to recover its lost ground, due to a major shakeout of leveraged traders and the now silent effects of Musk tweeting negative comments. The latest dip might have been what Bitcoin needed. Woo added:

“Newish whales dumped out, retail bought a chunk of the dip, coins getting more distributed, I’ll take that as a win.”

Bitcoin funding rates history. Source: Bybt.com

Interestingly, the steep plunge to $30,000 eventually resulted in Bitcoin funding rates turning negative all over to record lows that might bring fuel for a major short squeeze. Messari analyst Mira Christanto commented on the latest BTC funding rate data:

“That cleanse set up Bitcoin for $100k. Funding rates largely reset. The shakeout before the breakout.”

$4 Billion Irrational Trades Lost

On this topic of trader shakeout, new data acquired from Glassnode shows just how much leverage was flushed from the bitcoin market on the drop to $30,000 and back up to $40,000. In the day, open interest in Bitcoin futures dropped from above $17 billion to under $13 billion and remained at those levels.

William Clemente commented on the figures:

“Goodbye leverage.”

Bitcoin futures open interest chart. Source: William Clemente/ Twitter
Bitcoin futures open interest chart. Source: William Clemente/ Twitter

For the new buyers entering the space, Blockstream CEO Adam Back sent some cautionary words. He summarized in several tweets:

“Thoughts on leverage. *don’t*! Better just hodl, dca, cold store. if you’re gonna use leverage for fun/profit, you’re increasing risk a lot. do it with max 10% of coins (or less). never place a leverage trade without a limit stop, or implicit stop from small position liquidation.”

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