Bitcoin Decline Finally? 3 factors that could drive BTC price to new heights
Bitcoin (BTC) has seen a slight decrease in value over the previous twenty-four hours. The value of the royal coin has fallen from $23,839 yesterday to $23,109 today, a drop of 3.3%.
The world’s largest cryptocurrency measured by market capitalization, Bitcoin, has been in a turbulent period lately. The price dropped to $23,000 due to a number of factors, including the strengthening of the US dollar and a decline in US stocks. However, analysts at crypto intelligence tracker Santiment suggest that once BTC breaks out of its correlation with US stocks, it could enter a period of recovery.
The Crypto-China Narrative
China is a major player in the crypto market, and the recent People’s Bank of China’s (PBoC) liquidity injection into the economy has raised eyebrows in the crypto community. The central bank injected $73 billion into the banking system in the past week, with similar actions taking place in early 2020 during the COVID-19 crisis.
These actions are aimed at stimulating the domestic economy, and they are correlated with Bitcoin’s price floor. Therefore, they are crucial to resuming the cryptocurrency bull run. If the Chinese economy continues to recover, Bitcoin’s price is very likely to rise, given their deep ties with China.
BTC’s latest price rally and the futures market
Bitcoin’s recent price rally from $16,500 to $25,000 can be attributed to a brief squeeze in the futures market and recent macroeconomic improvements. However, while prices rose, data suggests that many interested buyers, including whales, remained on the sidelines.
The recent rally to $25,000 shared many similarities with the bear market rally of 2019, which saw a 330% increase in Bitcoin’s price to peaks around $14,000 from a low of $3,250 in November 2019. Recently, the royal coin rallied 60% from its November low 2022.
On-chain and market indicators regarding the 2019 rally are sending mixed signals about whether or not Bitcoin’s rally will continue. Still, if BTC can break out of its correlation with US stocks, there are strong reasons to believe it could enter a period of recovery.
Bitcoin’s 200-day moving average
Bitcoin’s price surpassed the 200-day moving average (MA) of $19,600, which could encourage paper traders looking to open a long position. Historically, this metric has acted as a bull-bear pivot line, with breakouts above it being bullish and vice versa.
BTC/USD usually retests the 200-day MA on a breakout, raising the possibility of a correction towards $19,500. However, this was not the case in 2019, as the price continued to rise without a pullback to the 200-day MA.
So until a breakout happens, traders can continue to stay on the sidelines. Funding rates for perpetual swaps are currently neutral, suggesting traders are awaiting confirmation.
