As Bitcoin breaks above the $21,000 level, many crypto analysts have started projecting further rallies for the asset. One of the famous crypto strategists, Crypto Kaleo, recently gave a lofty price prediction for the biggest cryptocurrency in the world.
Addressing its more than 550,000 followers on Twitter, Kaleo says BTC is gearing up for a rally to $30,000. Bitcoin last saw $30,000 during the bear market in June 2022. However, the crypto strategist believes there would be fluctuations as Bitcoin targets $30,000, albeit its bullish stance.
In his words, the market should expect more dips before Bitcoin hits $30,000. According to Kaleo, there would be dips below $20,000, which would trigger lower positions before Bitcoin was ready for the short squeeze.
A short squeeze occurs when crypto traders borrow assets at a particular price, hoping to sell them at a lower price and keep the difference. These traders often use over-leveraged short positions in the futures market. However, traders would have no choice but to buy the borrowed assets as price propulsion thwarts them, triggering more rallies as market makers withdraw liquidity to maintain momentum.
Kaleo is convinced that the short squeeze is approaching since the price of BTC has already jumped above 23% in seven days.
Bitcoin Rally Could Signal Increased Volatility
BTC has witnessed several bullish indicators since the start of 2023, taking it to a yearly high of over $21,000. Bitcoin’s bullish rallies have bolstered crypto traders’ hopes that the long-running bear market may soon end.
There was a reduction in Bitcoin Fear and Greed Index at Neutralwhich could lead to an increase in trading volume.
A massive increase in Bitcoin trading volume followed the recent price spike. Over the past week, Bitcoin trading volume has exceeded double the initial value, reaching $10.8 billion, an increase of 114%.
An increase in trading volume often leads to a spike in volatility. Current of bitcoin seven-day volatility level of 2.4% is lower than the 2022 value of 3.1%, but has remained stable during the recent recovery. It is likely that the steady increase in trading volume during the rally could cause a spike in volatility.
Centralized exchanges (CEX) have faced low trading volume, which means lower transaction fees and revenue, including staff layoffs. Therefore, the increase in trading volume is a welcome development for exchanges and BTC traders.
Bitcoin Recovery Underway as Profit Made and Trading Volume Rises
According to Glassnode data, on-chain profits for BTC return to the adjusted value of spent production profit ratio (aSOPR) of 1.0. Some analysts believe this is the critical resistance level. aSOPR historically indicates a shift in the total market cycle as increased demands (trading volumes) absorb profits.
BTC’s on-chain realized profit and loss ratio crossed the 1.0 mark, posting a profit of 1.56 against losses on January 16. This marked a reversal of the downward trend that began in May 2022. An increase in gain made without a price drop indicates market strength.
Glassnode’s on-chain analytics also suggest that a BTC price rally is underway. As the market absorbs more selling pressure without a price drop, the overall fear and macro shift will lessen.
Technically, volatility, trading volume and earned profits are pushing BTC decoupling of stocks. Bitcoin’s previous price action correlates with US stocks.
The correlation with equities could be due to the accumulation of assets by institutional investors. The correlation has reduced now that institutional investors are holding less BTC and may exit the market in the future.
Featured image from Pixabay, graphics from Tradingview.