The entire cryptocurrency market, especially Bitcoin and Ethereum, is experiencing a major surge. Bitcoin (BTC) has surpassed the $75,000 level for the first time in months, but some analysts say the current rise is excessive.
Several factors are believed to have contributed to the rise in Bitcoin and the cryptocurrency market, including the US Treasury Department’s decision to increase long-term bond buybacks, the SEC’s new cryptocurrency regulation proposal, and Trump’s meeting with leading figures in the crypto sector. This increased market optimism is said to have led to the liquidation of over $2.75 billion in Bitcoin short positions, accelerating the upward trend.
Analysts Approach Bitcoin Rise Cautiously!
However, some analysts are expressing doubts about the sustainability of the current rally. Speaking to The Block, Sean Young, a senior analyst at MEXC Research, stated that he is attaching too much importance to the US Treasury Department’s intervention. Young notes that the development only accelerated short liquidations, did not change Bitcoin’s fundamental macroeconomic conditions, and that it is too early to say that a move above $70,000 signals a lasting bull trend.
“…Movements in Treasury yields only led to the rapid liquidation of short positions; they did not improve Bitcoin’s macroeconomic conditions themselves.”
Zeus Research analyst Dominic John was also among those who approached the rally cautiously. The analyst stated that short position liquidations supported the rise in the short term, but that the rally needed to be sustained by continued new capital inflows, spot demand, liquidity, and strong macroeconomic conditions. John added that if the CLARITY Act progresses in September, the rise could transform into more permanent market growth.
One of those approaching the rise cautiously is Bloomberg Intelligence commodities strategist Mike McGlone. McGlone believes that the rise in Bitcoin may not be a permanent trend change, but rather a temporary bounce within a bear market. He points to high volatility, correlation with stocks, and oversupply in the crypto market as increasing risks, predicting that Bitcoin could decline by the end of the year.
While McGlone supports blockchain technology, he argues that Bitcoin’s original purpose as a peer-to-peer cash service has been weakened by the emergence of cryptocurrency alternatives.
Is There Hope for an Uptrend?
In contrast, crypto asset manager 21Shares stated in its latest analysis that selling pressure on Bitcoin has almost reached its lowest levels.
Company analysts noted that the Bitcoin Seller Exhaustion indicator is currently at around 0.007, which is the lowest point in all daily measurements since 2010.
Analysts also note that this indicator has reached this level 11 times before, and in all 11 historical cases, Bitcoin reached higher levels a year later. The median return after one year was also stated to be 155%.
However, 21Shares analysts specifically emphasize that this indicator does not definitively show that Bitcoin has bottomed out, warning that short-term declines have occurred following similar signals in the past, and that similar declines are still possible in the current situation.
*This is not investment advice.