At long last, Bitcoin (BTC) has simmered down, with the asset falling to $7,900 from a weekly high of $8,350. This has led some, like popular analyst Filb Filb, to consider the idea that the cryptocurrency market have topped… for now anyway. In a recent tweet, the analyst, who recently won a one BTC bet with Leah Wald and Tyler Jenks, suggested that the “local BTC top is in”.
He notes that the long-short ratio on Bitfinex has been “nuked”, dramatically reducing the chances of a short squeeze, which would pressure Bitcoin higher. What’s more, bid support (buy support) is decreasing hour-over-hour, the parabola that BTC has traced for the past few months is “shaky”, and there is decreasing volume in this embryonic market, all signs which aren’t too reassuring.
From here, Filb expects for Bitcoin to retrace to the 0.618 (61.8%) Fibonacci retracement at around $5,200 which he believes could be the last place to accumulate BTC, potentially ever.
He isn’t the first to have suggested that a drawdown is inbound. Josh Olszewicz of Brave New Coin recently pointed out that Bitcoin’s chart is screaming for a pullback to “below $7,000”. He looks to the fact that the Ichimoku Cloud, a collection of indicators used to discern trends, momentum, and key levels, is currently showing that BTC is overextended.
Why BTC Could Hold Current Levels
This might not happen though. First off, while the crypto market’s nature is one of intense cyclicality — booms and busts, parabolic run-ups and heartbreaking drawdowns — historical price action isn’t indicative of future performance. As Interchange’s Dan Held recently pointed out, the dynamics in this market are entirely different than 2013, 2017, or even 2018. Things have changed to put it briefly.
Case in point, the industry has some of the biggest names in finance and technology delving in. Square, through its Cash App and chief executive Jack Dorsey; Fidelity Investments; E*Trade, Bakkt, and ErisX are among the developments in the space that make this rally entirely different than anything before it. Thus, some deem it logical that warnings of a large market correction can be deemed moot.
On-chain data may corroborate this. Renato Shirakashi, a lesser-known yet respected Bitcoin analytics guru, notes that the Spent Output Profit Ratio (SOPR), an indicator he recently created to predict local tops and lows, is currently “relatively high”, signaling a local peak. However, Shirakashi notes that this sign, which could mean there is an increase in selling pressure, would “normally push prices down”.
But with the market continuing to head higher, he suggests that demand for BTC is increasing, thereby absorbing the increase in market supply. What’s more, the median lifespan of unspent outputs isn’t changing, meaning that “HODLers” continue to “HODL”, and that the only BTC being circulated on exchanges right now are those recently mined.