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Bitcoin FOMO Rally to Print 7th Green Candle But Now Overbought

Less than 12 days from halving, the broad risk-on environment pushed the price of bitcoin as high as $9,485. Currently, the world’s leading cryptocurrency is trading around $8,650.

Bitcoin is now working on printing its 7th green candle that was last seen three years ago when the digital asset climbed to a new all-time high.

“This is an unprecedented time as liquidity remains a priority for investors fleeing equity markets. Therefore, while Bitcoin should rise into $10,000s after the halving, it could be followed with a price drop as investors engage in profit taking,” said Christel Quek, chief commercial officer and co-founder at Bolt Global.

Other riskier assets also spiked with stocks now up over 30% over the past month. However, economist and trader Alex Kruger doesn “not think that equities performance had much to do with BTC this time” as “reaction times are not at all aligned anymore.”

In April, compared to stocks 30%, BTC soared 44% which is no surprise given that April along with May and June have “always been a strong period for $BTC.”

Also, Q2 has always been a bullish month for bitcoin.

Based on the GTI Global Strength Indicator, this rally has the flagship cryptocurrency entering overbought territory. When the reading of an asset goes above 70, it gets overbought territory which indicates additional gains in the short-term for the digital asset may be difficult.

The market is experiencing an “incredibly volatile trading range since 2018” as long-term consolidation bottomed near its 200-week moving average which means it is likely we would see an “upside over the coming two to four quarters,” said Rob Sluymer, an analyst at Fundstrat.

Spot driven rally?

Interestingly, this rally is driven by the spot market with $4.68 billion worth of BTC exchanged on top ten exchanges with real volume in the past 24 hours.

Also, Binance made a new record with its volume surpassing $16 billion, as per CoinMarketCap, the website acquired by Binance recently in a $400 million deal.

The last time the leading spot exchange had volume above $10 billion was in January 2018, shared Binance co-founder and CEO Changpeng Zhao adding, “Still going strong. FOMO mode now.”

BitMEX open interest meanwhile hit a new all-time low while its volume was 10x the OI.

Yesterday was a vibrant trading session for the futures market as well. The aggregated daily volume was $30 billion, “the most active session since the March crash,” noted Skew Markets.

Bitcoin options also had its busiest day since March 12th. The short term skew is indicating a shift in investor sentiment as “the price of puts relative to calls – came off rapidly on meaningful trading volumes.”

What’s next?

Currently, bitcoin is down 7% from its today’s highs. But Nemo Qin, senior analyst at eToro says “Bitcoin will test the $9,000-$10,000 range again prior to the halving.”

But the fact that halving will make it 50% less profitable to mine bitcoin, this could very well be “buy the rumor, sell the news.”

Bitfenix Bitcoin whale Joe007 who has been calling out the halving to be a bearish event as overleveraged miners will get rekt has clarified that he is “never net short BTC” and this time there was “definitely new fiat inflow lately, as evidenced by USDT market cap.”

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