Bitcoin (BTC) price crossed past $40,000 following an upward momentum over the last three days and it looks likely to stay above this level in the near term. Analysis of recent market activity indicates that BTC has great likelihood to stabilize above this level, turning $40,000 from resistance to key support level.
Eased whale pressure catalyst for BTC price recovery
The price of the leading cryptocurrency broke above $40,000 on Feb. 6, reclaiming the key psychological level for the first time in 23 days. The last time it hit this price, it plummeted soon afterwards after failing to find stability in this zone. This time round, the analysts feel that the digital asset is likely to stabilize around this price as market sentiment is less calm and collected with fewer derivatives. Additionally, there is less selling pressure with slowing activity on the Bitcoin futures market, all of which could help its price to stabilise above $40,000.
These market conditions have been effectively publicised by a Twitter-based bitcoin researcher known as ‘Material Scientist’ who indicated that mega whale orders had reached an all-time high on Jan. 29. The mega whales are those trading bitcoin worth between $1-10 million. Therefore, with their selling pressure starting to ease, the market is likely to find stability and set up the stage for a decent bull run.
Whales bought back almost everything they had sold since $40k, and mega-whales are about to make a new ATH on their orderflow.
— Material Scientist (@Mtrl_Scientist) January 29, 2021
New support levels to watch out for
Analysts now suggest that Bitcoin will potentially flip the $40,000 from resistance to support level from which a push towards $50,000 can be established. Without the massive selling pressure from big bag holders, the digital asset could now rally towards setting a new all-time high as high net-worth individuals and institutions continue to consolidate their positions.
For bitcoin to reach new all-time high it needs to stay on its current upward momentum to avoid a quick reversal. More importantly, analysts suggest that the market needs to protect key support levels at $40,000 and $37,834.
In the unfortunate event that bitcoin is not able to stay above these key levels then it could break out into a near-term bearish run before finding stability. However, according to data from a bitcoin analytics firm, Whalemap, this is unlikely to occur as whales have found confluence between $36,290 and $37,834.
Confluence of whale supports at $37834 –> $36290. A new cluster formed yesterday in that area too. This should give BTC a nice base to take off from if we ever get there. Otherwise $39843 should provide some help too. pic.twitter.com/UCRrfBgb3r
— whalemap (@whale_map) February 6, 2021
This means, the digital asset is likely to stay on an upward trajectory as people with large volumes to influence price are keen to keep the bitcoin’s value within that range. These support levels are thus expected to form the base for the next bull run.