Quick take:
Sundays are usually slow days in the crypto markets with many traders expecting sideways movement from Bitcoin (BTC) or a catastrophic dip. However, Bitcoin has done the opposite only moments ago when BTC wicked hard from the $9,700 price level to $10,115 – Binance rate.
With this quick move, Bitcoin has broken the psychological price level of $10,000. However, the King of Crypto has since dropped down to $9,970 as crypto traders attempt to figure out BTC’s next move.
The exciting move by Bitcoin above $10,000 had been predicted by Timothy Peterson, an Investment Manager at Cane Island Alternative Advisors. Mr. Peterson had predicted that BTC would retest $10,000 by mid-August. His prediction was based on his use of Metcalfe’s law. He made this prediction on July 1st via the following tweet.
Metcalfe’s law is usually used in the telecommunications industry and states that the effect of a telecoms network is proportional to the square of the number of connected users of the system. Mr. Perteson has expanded this law to analyze Bitcoin and has even published a research paper about it.
He has since provided a glimpse of how he uses it to calculate Bitcoin’s value via the following tweet only hours ago.
Bitcoin’s surge above $10K has returned BTC to pre-Covid19 levels last seen in late February. To note is that the CME Bitcoin futures are still paused at Friday’s price of $9,600. Additionally, the CME futures expire this Friday, 31st July. Therefore, judging by past situations where there is a CME gap, Bitcoin will eventually dip down and fill it. To get a feel as to when this might happen, it is worth looking at the daily BTC/USDT chart.
From the daily Bitcoin chart, the following can be observed.
Furthermore, Bitcoin could remain in bullish territory as a result of the news of VISA, Mastercard and Paypal planning on supporting crypto transactions. Additionally, the news of US banks being greenlighted to offer crypto custody solutions will provide much-needed fuel for BTC to rebound if it drops to fill the CME gap.
As with all analyses of Bitcoin, stop losses and low leverage are advised when trading BTC during volatile times.