Bitcoin (BTC) price topped $ 40,000 on May 26, breaking a major sales range for the first time in five days.
Traders expect a broader rally and bullish market structure as Bitcoin continues to climb above $ 42,000 and Ether (ETH) recaptures $ 3,000.
$ 42,000 and $ 49,000 are major resistance levels
Bitcoin has rallied over the past week due to three main factors.
First, Elon Musk, CEO of Tesla, and Michael Saylor, CEO of MicroStrategy, encouraged Bitcoin miners to use cleaner energy.
Musk and Saylor have gone further since then, speaking to bitcoin miners in the US about reliable energy usage.
Talked to North American Bitcoin miners. They pledged to publish the current and planned use of renewable energies and to ask the miners WW to do so. Potentially promising.
– Elon Musk (@elonmusk) May 24, 2021
Second, the bitcoin futures market has largely been rolled back. According to data from Bybt.com, the futures market’s open interest fell from $ 27 billion to $ 11 billion when BTC plunged below $ 30,000.
This means that the futures market is not crowded, which increases the likelihood of a more sustained and gradual rally.
Third, Ethereum has grown rapidly in the past few days, which also benefits Bitcoin and Altcoins as ETH posted a deeper correction than BTC.
The overall recovery of major cryptocurrencies is improving sentiment around Bitcoin and leading to a gradual recovery in the crypto market.
In the short term, traders say $ 42,000 is the major short term resistance area and then $ 49,000 is the macro sell area.
A pseudonymous trader named “Pentoshi” wrote:
“A lot of alts are facing some resistance +/- a 5%. We got a medium reversal as discussed during the nuke. However, $ BTC is stuck. It started the LH trend a month ago. I would like Bitcoin Pop +.” 42k or alts see they probably make their own LHs and dive back in. The clock is ticking. “
What is important to note?
For the foreseeable future, the two most important things to watch out for for Bitcoin traders are the exchange outflows and the $ 42,000 level.
Ideally, investor confidence in BTC and whales would rise to over $ 42,000 if the $ 42,000 level is held and Bitcoin exchanges’ outflows increase at the same time.
There are concerns that a dead cat bounce may form, representing a short-term recovery. However, if BTC holds $ 42,000, the likelihood of a fakeout rally would be greatly reduced.