Can Bitcoin price break through the 10,000 mark?

In the digital currency market, Bitcoin, as a highly volatile asset, often attracts widespread attention for its price trend. Recent data analysis shows that the probability of Bitcoin price breaking through 10,000 yuan in June is only 16%. This seemingly pessimistic figure hides the complexity of the market and the psychological game of investors. This article will explore this phenomenon from multiple angles, analyze the reasons for Bitcoin price fluctuations, and provide some investment advice.

First of all, we need to understand the basic factors of Bitcoin price fluctuations. Bitcoin prices are affected by many factors, including market supply and demand, policies and regulations, technological development, market sentiment, etc. In terms of supply and demand, as more and more investors pour into the Bitcoin market, demand continues to increase, especially in the context of increasing economic uncertainty, digital assets are seen as a hedge tool. However, supply restrictions are also constantly affecting prices. The total amount of Bitcoin is limited to 21 million, and this scarcity supports its price to a certain extent.

In addition, changes in policies and regulations have also had an important impact on Bitcoin prices. Taking China as an example, the tightening of digital currency regulation in recent years has caused some investors to have doubts about the future of Bitcoin. This uncertainty often leads to fluctuations in market sentiment, which in turn affects prices. For example, after the Chinese government announced a ban on cryptocurrency trading in 2021, the price of Bitcoin fell instantly and market confidence was hit. Therefore, when investors pay attention to price trends, they must always pay attention to policy dynamics.

Technological development is also an important factor affecting Bitcoin prices. Technological advances in the Bitcoin network, such as the launch of the Lightning Network, can improve transaction efficiency and reduce transaction costs, which to a certain extent enhances the use value of Bitcoin. In addition, more and more merchants are beginning to accept Bitcoin as a means of payment, which undoubtedly provides support for its price. With the continuous development of blockchain technology, the application scenarios of Bitcoin will be more abundant in the future, and investors' expectations of its prospects may also change.

Market sentiment is another key factor affecting Bitcoin price fluctuations. The Bitcoin market tends to be highly speculative, and changes in investor sentiment can quickly trigger price fluctuations. For example, the popularity of discussions about Bitcoin on social media and the remarks of well-known investors will have a direct impact on the market. In 2021, Tesla CEO Elon Musk's tweets about Bitcoin once caused sharp price fluctuations, fully demonstrating the influence of market sentiment on prices.

While analyzing Bitcoin price trends, we also need to pay attention to investors' psychological factors. Faced with market uncertainty, many investors tend to adopt conservative investment strategies, especially when prices fluctuate greatly. According to survey data, many investors tend to panic when facing losses and choose to sell at a loss. This psychological reaction not only affects personal investment decisions, but also affects the overall market trend. Therefore, when investing in Bitcoin, investors must remain rational and avoid emotional operations.

From the perspective of technical analysis, the volatility of Bitcoin prices can be evaluated by a variety of indicators. For example, technical indicators such as the relative strength index (RSI) and moving average (MA) can help investors judge the overbought or oversold state of the market. However, it is worth noting that technical analysis cannot fully predict future price trends, and the unpredictability of the market is still a major risk of investing in Bitcoin.

In this context, facing the data that the probability of Bitcoin prices breaking through 10,000 yuan in June is only 16%, how should investors respond? First of all, it is recommended that investors fully understand the fundamentals and technical aspects of the market and formulate a reasonable investment strategy before investing in Bitcoin. Don't blindly follow the trend, especially when market sentiment is high, the risk often increases.

Secondly, proper asset allocation can effectively reduce investment risks. Investors can use Bitcoin as part of their investment portfolio instead of investing all their funds in a single asset. By diversifying investments, the risks brought by market fluctuations can be reduced to a certain extent. At the same time, investors should set reasonable stop-loss and stop-profit strategies and adjust their investment portfolios in time to cope with market changes.

Finally, maintaining market sensitivity is an important factor for successful investment. Investors need to pay attention to market dynamics regularly and adjust their investment strategies in time. Whether it is policy changes, market sentiment or technological development, it may affect the price trend of Bitcoin. Therefore, maintaining a learning and observation attitude can help investors find opportunities in a complex market environment.

When summarizing the various factors of Bitcoin price trends, it is not difficult to find that the complexity and uncertainty of the market are its inherent characteristics. Faced with the probability of Bitcoin price breaking through 10,000 yuan in June is only 16%, investors should not only see the surface of this number, but should deeply analyze the reasons and market dynamics behind it. Through rational investment and scientific decision-making, it may be possible to find a more stable investment path in a volatile market.

In this ever-changing digital currency market, every price fluctuation may bring new opportunities and challenges. For investors, keeping calm, in-depth analysis, and reasonable asset allocation can be invincible in this uncertain market. The future of Bitcoin may still be full of variables, but it is this variable that makes the investment process full of infinite possibilities and challenges. Whether in the pursuit of profits or in the wave of exploring emerging technologies, investors need to remain vigilant and respond proactively at all times in order to gain the upper hand in this digital currency game.

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Data shows that the probability of Bitcoin price breaking 10,000 by June is only 16%! As Bitcoin continues to fluctuate sharply, people tend to look for more reliable "value discovery" logic from many interpretations. As a data-based research institution, Arcane
Research also analyzed the "recovery" of Bitcoin since the "3.12" crash from the aspects of macroeconomics, transactions and on-chain data, and found the next possible "rising point". Its core views are as follows:

After rising by 70%, coin holders still cannot get rid of "extreme fear";

The reverse spread between futures and spot indicates a bearish market;

The volatility of the currency price has reached the annual peak and will continue;

BTC turnover rate has escaped the trough, which may bring the possibility of rising;

Forecast: The probability of BTC rising above 10,000 US dollars in June is only 16%.

01 After rising by 70%, coin holders are still "extremely afraid"

We often hear about the daily fear and greed index, but I am afraid that only by looking at it over a longer period of time can we truly understand the meaning of this data.

The following figure shows the fear and greed index of Bitcoin over the past year. The vertical axis represents from extreme fear to extreme greed from bottom to top.

Source: Alternative

As can be seen from the figure, there have been only two "extreme fears" in the past year. The first occurred in early August last year, when Bitcoin soared and plummeted, and the market experienced extremely short-term extreme fear.

The second time was the last two weeks of the "3.12" crash. Although the price of Bitcoin has risen by about 70% from the lowest point, it has not fundamentally reversed the confidence of the market. The fear and greed index in the past two weeks was 12 and 14 respectively. It is still in extreme fear.

Such a long period of panic also occurred in December 2018. At that time, Bitcoin halved in one month and fell all the way to the bottom range of $3,200. This indirectly shows that for current market participants, Bitcoin of $3,800-6,000 may be the lowest value of their psychological expectations.

Odaily Planet Daily Note: The threshold of the panic index is 0-100. The influencing factors include: volatility (25%), market trading volume (25%), social media popularity (15%), market research (15%), the proportion of Bitcoin in the entire market (10%) and Google hot word analysis (10%).

02 The reverse spread between futures and spot indicates a bearish market

The "3.12" crash brought two significant changes to the Bitcoin futures market: one is the plunge in trading volume; the other is the abnormal phenomenon that the transaction price of futures is lower than its underlying spot.

Skew data shows that the open interest of the XBT/USD (Bitcoin) perpetual contract on the BitMEX platform fell to 55,000 BTC, a new low in 18 months. According to TokenAnalyst data, the number of Bitcoins withdrawn from BitMEX in the past two weeks exceeded the number of Bitcoins deposited, resulting in a net outflow of 67,000 Bitcoins from the platform.

Futures trading volume reflects the sluggish trading atmosphere in the contract market and the temporary rest of the market main force; in the traditional stock market, the reverse spread of stock index futures relative to the spot index is a signal of a bearish stock market. Therefore, Arcane Research said that this is not necessarily a good sign for Bitcoin. Before the plunge, the BTC futures prices in June and September were higher than the spot prices, but now it is the other way around. However, such a market is not lacking in arbitrage opportunities. Arcane Research pointed out that this is good news for bulls who want to prepare for a position, which means that they can relatively easily return to the premium of the futures price. 03 The volatility of the currency price has reached the annual peak and will continue. One of the main reasons for the departure of contract players is the current high volatility of Bitcoin. According to the data from Cryptowat.ch, the 30-day volatility of Bitcoin prices has reached the highest level in a year, currently exceeding 9%. The higher the volatility, the greater the uncertainty of asset returns. Arcane Research pointed out that under the systemic risk of global economic turmoil, the price trend of Bitcoin will still be difficult to stabilize in the future, so it is recommended that market participants should act with caution. Source: cryptowat.ch

04 BTC turnover rate escapes the trough, may bring up the possibility

Arcane
Research also introduced us to a less common but interesting indicator: Velocity (Bitcoin network rate), the data comes from Bytetree, an institution that monitors this indicator for a long time.

Bitcoin network rate refers to the speed of Bitcoin turnover, with an observation period of 12 weeks, and the unit is 0-2000%. If the Bitcoin rate is 1000% in 12 weeks, it means that Bitcoin circulates 10 times a year; a high network rate means that Bitcoin circulates faster and the market situation is better.

According to Bytetree statistics, since 2013, there have been only five times when the rate was lower than 600% of the "historical danger level", which were March 30, 2014, August 1, 2018, March 13, 2019, and August 20, 2019-last week.

Usually, low rates often lead to price declines. Fortunately, just last week, we can see that Bitcoin has come out of the low rate of 600%. Arcane Research believes that this may be a bullish signal, indicating that Bitcoin is moving in large quantities and playing a positive role in financing.

05 Prediction: The probability of BTC breaking 10,000 in June is only 16%?

According to Skew markets, on March 29, the Put/Call ratio of Bitcoin option contracts reached 1.10. This is the highest level since March 13.

In traditional financial markets, if the Put/Call ratio is higher than the range of 0.7-1, it indicates that there is a lot of short pressure because traders are more likely to sell rather than buy. There may be many reasons for this selling pressure, the most important of which is the expectation of falling prices.

Before the "3.12" crash, this ratio once soared to 1.39. It was the highest level in the past 3 months; two days after reaching 1.39, the spot price of Bitcoin fell from US$7,800 to below US$4,000. At the same time, Bitcoin's Put/Call ratio also fell below 1.08.

So far, this ratio has risen back to 1.10. This may mean that Bitcoin's price outlook is not optimistic.

According to Skew data, the prices of various options platforms show that by the end of June 2020, the probability of BTC breaking through $10,000 is only 16%, while the probability of being below $5,000 is as high as 80%.

However, it is difficult to say that using option prices to predict the underlying price works in traditional financial markets, not to mention the digital currency market where the financial derivatives market is not yet mature. So, let's just laugh at this data.