Bitcoin price may be trading as much as 40% lower than it was at the start of they year, but the low prices are causing significantly more buy pressure in the cryptocurrency market than the massive early 2020 rally that took the asset to over $10,000.
Remembering Bitcoin’s Rally in Early 2020
2017 was all about Bitcoin’s meteoric rise and putting cryptocurrencies on the map. The price of all major cryptocurrencies ballooned and retail investors flocked to the likes of Coinbase to FOMO buy the asset.
2018 saw the valuations of these emerging assets evaporate, and expectations surrounding their potential come back to reality.
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In 2019, cryptocurrencies like Bitcoin saw the start of a recovery, but around the summer, the rally topped out and Bitcoin fell back to $6,000.
At the start of 2020, Bitcoin price staged a major recovery, growing by over 50% and surging to above $10,000 – the same level that caused massive FOMO in 2017.
But the rally failed to sustain, and new money never arrived into the market. The lack of buy pressure, however, left Bitcoin extremely vulnerable.
The failure to incite FOMO coincided with the coronavirus spiraling out of control and causing a widespread selloff across all markets.
The fear over what’s to come caused Bitcoin to collapse to under $3,800. But ever since the cryptocurrency reached these low prices, buy pressure has returned in a big way.
$BTC analysis and why I’ve been so bullish the past month. The halving bull run was interrupted by a world pandemic and financial crisis. Mass panic and capitulation ensued. We now have MORE buying pressure than before. $BTC naturally wants $10,000 back. pic.twitter.com/q5ghwH6nKB
— incomesharks (@IncomeSharks) April 3, 2020
On-Balance Volume Shows More Buy Pressure Than When BTC Was Trading at $10K
According to the On-Balance Volume indicator, often referred to as the smart money indicator, it is showing a massive surge in buying pressure. There’s been far more buying pressure in Bitcoin ever since the catastrophic drop in mid-May than there was during the early 2020 rally to over $10,000.
The On-Balance Volume indicator can tip analysts off as to when volume is increasing ahead of price. There’s a common saying that volume often precedes price, due to “smart money” taking positions before the rest of the herd.
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When price begins to respond, herd mentality caused the rest of investors to follow.
On-Balance Volume on Bitcoin price charts shows that although prices are far lower than they were just a month prior, there’s significantly more interest at these low prices.
This is normal market dynamics playing out right before our very eyes. At prices above $10,000, investors saw Bitcoin as too expensive, causing the asset to fall to much more attractive prices. Now that Bitcoin price is here at these lows, investors aren’t passing up the chance to buy cheap BTC.
The cryptocurrency is already trading at nearly double that of the recent local bottom at roughly $3,800, and if the buying sustains here, it is very likely that the bottom is in, and those lows are never seen again.
Featured image from Shutterstock
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