As Bitcoin (BTC) continues to consolidate above the $34,000 mark, aiming to surpass and reclaim its yearly high, theories suggest that a retracement could follow the current bullish peak. in the next weeks.
On this subject, the famous crypto analyst known by the pseudonym “Crypto Soulz” recently shared his ideas on the short-term retracement potential of Bitcoin in a recent article on X (formerly Twitter).
BTC Local Top at $36,000 Signals Potential Reversal
According to According to Crypto Soulz, a key resistance level for Bitcoin is identified at $37,370. The analyst suggests that this resistance level is unlikely to be retested from the current position.
Additionally, Soulz points out that liquidity was absorbed around $36,000, which he considers a “trigger” to take short positions.
The analyst points out that BTC’s local high was seen at $36,000, where a long wick formed, followed by a retracement. This price action is considered a potential indication of a reversal.
Additionally, Crypto Soulz emphasizes the use of on-chain data as a confluence for BTC positions. Soulz points out that the spot market showed an upward trend before perpetual futures followed.
The spot order book (OB) is expected to increase but is expected to decline, as is the perpetual market. If $36,000 is indeed a local high, the analyst suggests that spot and perpetual should decline thereafter.
Additionally, Soulz highlighted that BTC managed to break through key technical indicators, such as the 200-day simple moving average (SMA), 200-week SMA, and 365-day SMA, which currently serves as support.
Ultimately, Soulz further states that there is no substantial liquidity available above $38,000. The analyst identifies two liquidity poolsas shown in the chart above: the first at $33,000, which he considers his initial target, and the second at $31,000, where a slight rebound could occur.
Bitcoin potential as a store of value
In another development, Jurrien Timmer, Director of Global Macro at Fidelity, delved into the characteristics of Bitcoin and its potential to serve as a store of value and hedge against currency depreciation.
Timmer acknowledged that Bitcoin had followed a pattern of “boom-bust cycles”, just like its previous market behavior. However, he also highlighted Bitcoin’s evolving role as a commodity currency that aspires to be a store of value.
Additionally, Timmer described Bitcoin as “exponential gold,” suggesting that it shares similarities with gold but with further growth potential.
While gold is traditionally recognized as a store of value, Timmer highlighted its limitations as a medium of exchange due to its deflationary nature and lack of efficiency.
Timmer drew attention to historical periods, like the 1970s and 2000s, where gold showed strength and gained market share. These periods coincided with structural regimes marked by high inflation, negative real rates and excessive money supply growth.
Timmer suggested that Bitcoin, with its potential to serve as protect against inflation and debasement, could play a similar role in such environments.
Given Bitcoin’s attributes and the evolving macroeconomic landscape, Timmer expressed optimism about its potential to join the ranks of gold as a valuable asset.
While recognizing the volatility and speculative nature of cryptocurrencies, Timmer believes that Bitcoin’s unique characteristics position it as a viable competitor in the store of value space.
Currently, BTC is trading at $34,700, reflecting a 1.5% increase over the past 24 hours as it continues to reach the $35,000 mark.
Featured image from Shutterstock, chart from TradingView.com