Bitcoin Continues its Bullish Run, Rises to $32,000 as it Outperform Altcoins

Following nine weeks of losses, Bitcoin (BTC) is showing signs of life. Extreme pessimistic sentiment and oversold signs appear to have enticed some buyers back into the market.

BTC’s relief rally peaked on Sunday when it surpassed $30,000 for the first time. According to Arcane Research, the weekend price increase was bitcoin’s biggest daily gain since March, with the price up 7.8%.

Meanwhile, on Tuesday, most alternative cryptos (altcoins) underperformed bitcoin, indicating that traders are still hesitant to take on further risk. After breaking above a yearlong decline on May 13, Bitcoin’s market cap relative to the total crypto market value has climbed in the last three days. Because of their increased risk profile, altcoins typically underperform BTC in down markets.

Even so, as gloomy emotion began to fade, some altcoins gained on Tuesday. Cardano’s ADA token and Axie Infinity’s AXS token, for example, have risen by up to 15% in the last 24 hours, compared to a 4% growth in BTC.

On the other hand, Avalanche’s AVAX token fell 3% on Tuesday, while Monero’s XMR token fell 4%. Despite the recent respite in risk-off circumstances, trading conditions in cryptos and stocks are still tumultuous.

Squeezed Tightly

BTC’s price surge on Sunday sparked the greatest increase in short liquidations since May 11. This could indicate a short squeeze, which occurs when traders who are short Bitcoin rush to finish off their holdings when the price increases abruptly.

When a trader’s leveraged position is forced closed by an exchange as a safety mechanism due to a partial or total loss of the trader’s initial margin, liquidations occur. This is mostly seen in futures trading.

Bounce after being Oversold

According to several indicators, Bitcoin and other cryptocurrencies are severely oversold. The cyclical momentum indicator of MRB Partners is the most oversold since the crypto bad market of 2018. This could indicate a short-term uptick in cryptos.

Even though prices are in a decline, momentum indicators might remain oversold. A cross above oversold criteria can sometimes signal a positive price move, similar to what happened at the end of prior bear markets. It can take a few weeks for that to happen.

The recent price increase has some experts skeptical. “While it’s possible that BTC will continue its reversal after posting its first green weekly candle in ten weeks,” FundStrat noted in an email.

Despite oversold readings, MRB released a research last week that outlined a number of macroeconomic concerns that could weigh on bitcoin’s price. BTC’s slide since November has corresponded with tighter liquidity circumstances, a drop in worldwide negative yielding debt, and reduced sums of cash held in money market funds and savings deposits — a full reversal of the crypto and stock boom years.