The price of Bitcoin surpassed $11,400 for the third time in three days, breaching a critical resistance level. Earlier today BTC price reached $11,444 but it quickly rejected back to the $11,250 range.
Surprisingly, within the last hour the price has risen above the $11,400 mark again and some traders believe that repeated retests of the resistance could raise the chances of a breakout.
Spartan Group’s Kelvin Koh said that when BTC breaks out of $11,400, a rally to $12,000 is likely. Meanwhile, on-chain analyst and trader Willy Woo said Bitcoin’s rally above $11,000 could place BTC at the start of the “main bull phase.”
The 1-hour price chart of Bitcoin. Source: TradingView.com
After surging to as high as $10,470 on BitMEX, the price of Bitcoin dropped to around $11,260. Currently, the resistance range from $11,200 to $11,400 is seemingly triggering sellers to defend this level and prevent a major breakout.
Investors are optimistic about the chance of a Bitcoin bull run
On June 27, on-chain analyst and Bitcoin trader Willy Woo revealed a new price model for BTC. The model suggested that a new bull run for the top cryptocurrency is brewing. At the time, Woo said:
“This is a new model I'm working on, it picks the start of exponential bull runs. 1) Bitcoin was setting up for a bullish run until the COVID white swan killed the party. 2) This model suggests we are close to another bullish run. Maybe another month to go.”
The weekly price chart of Bitcoin with a new price model. Source: Willy Woo
A month has passed since the model was revealed and the price of Bitcoin has increased from $9,100 to over $11,000. Following up on the model, Woo said he is “relatively confident” the main bull phase is igniting.
The analyst broke down various on-chain data points, including Bitcoin’s mempool and the relative strength index (RSI), to evaluate market cycles. Woo said that the on-chain RSI, specifically, suggests the main bull market could begin in the fourth quarter.
Woo explained that:
“With the current break to 11K, I'm relatively confident last months model is working on queue, we're at the start of the ‘main bull phase’... 365 day on-chain RSI shows the compression at the early phase of the bull cycle nearing completion, I'm expecting RSI expansion that typifies the main bull season run starting Q4 2020 into 2021.”
Similarly, Koh said that if the price of Bitcoin continues to increase above $11,400, it will sustain its momentum. But if BTC continues to rally, the investor emphasized that alternative cryptocurrencies could consolidate. Koh said:
“If BTC breaks the resistance at $11.4K, we are going above $12K in no time. Will take the wind out of altcoins again in the short term.”
Before BTC exceeds $12,500, the sentiment is not so bullish
According to ExoAlpha chief investment officer David Lifchitz, profit-taking from well-performing DeFi tokens led BTC and Ether (ETH) to surge. The initial upsurge then led to short contracts on futures exchanges being liquidated.
As Bitcoin started to rally, DeFi tokens and other top alternative cryptocurrencies started to decline, which strengthens the argument. Assets in the likes of Compound, Chainlink, and Cardano, which outperformed BTC in June, stagnated in the past several days.
Lifchitz told Cointelegraph:
“The recent move in BTC-USD seems to have been linked to DeFi coins profit-taking rolled into the majors (Bitcoin and Ethereum), which triggered a short squeeze of the overleveraged shorts at the BitMEX casino.”
In the short-term, Lifchitz said a pullback could occur as the market cools down, but if BTC surpasses $12,500 and remains on top of it, a bull market could then materialize. Lifchitz said:
“So basically, the run-up in Bitcoin seems more driven by rotation and a devaluating USD than a genuine interest in the coin, but should BTC reach and remain above $12,500 (i.e. July 2019 high) it could change the narrative. In the short term, a small pullback might be in the making, which would be healthy from here before engaging in a new run to $12,500.”
Overall, traders and on-chain analysts remain positive after Bitcoin’s relatively swift rally above $11,000.
There are some risks of a pullback as the futures market gets overheated with high funding rates, but the sentiment appears to be improving, and BTC is repeatedly testing a key resistance level at $11,400 as a result.