3 reasons why traders are bullish on Bitcoin after it surged to $107,000

Analysts are cautiously optimistic about bitcoin prices after the cryptocurrency surged 6% to $10,750.

Today the price of Bitcoin (BTC) suddenly increased by 6%, from 10,136 yuan to 10,743 yuan.

After a strong 24-hour rally, analysts are now cautiously bullish on Bitcoin for a variety of reasons, but can the price of Bitcoin hit the $11K mark anytime soon?

Cryptocurrency Daily Market Performance Snapshot

Currently, factors that appear to be boosting investor sentiment are negative funding rates, BTC whale activity, and recent weakness in the U.S. dollar.

Funding rates on most exchanges are neutral or negative.

BTC/USD daily chart

Currently, even as the price of Bitcoin hovers above $10,000, funding rates across futures exchanges are either neutral or negative.

Bitcoin futures exchanges use funds to ensure the balance of the market and suppress the majority of the market to prevent the market from tilting to one side for a long time.

If traders who are long contracts, or betting on the rise in Bitcoin prices, are in the majority, they will need to pay short contract holders. The opposite would be the case if short contract holders dominate the market.

When the funding rate turns negative, it means that most of the market is shorting BTC. Typically, when the funding rate remains below zero, it leads to a short run and a spike in BTC prices. It could also be a sign that short-term bets are too crowded, increasing the likelihood of a rush.

A popular pseudonymous trader named “DonAlt” tweeted that it was “weird” to see negative funding rates as bearish sentiment. He said:

“It’s very, very strange to see sentiment so bearish and to see neutral or negative funding over $10,000. I don’t think I can remember that happening before.”

The trader also noted that he sees selling pressure absorbing at $10,000. He added:

“Right now the absorption I’m seeing is at $10,000 and it seems to be only from people selling derivatives, I’ve closed my shorts and will see how next week plays out.”

The Bitcoin market is crowded with short-term contracts, while at the same time, some top whales may move their holdings away from exchanges.

Optimistic Whale Activities

According to whalemap, a chain analyst that tracks the activity of stealth whales, top buyers moved their BTC on Sept. 23.

A map of unspent Hodler Bitcoins

Analysts say that top buyers moving funds are usually bullish catalysts for BTC. They explain:

He said: “The top buyers were moving their coins yesterday. Based on my personal experience, taking this metric into account, the next day after the top buyers moved, we went up.”

Weaker dollar

As COVID-19 cases surge in the U.S., lawmakers are deadlocked over the future of a much-needed stimulus package, which is why leading strategists are speculating on a weaker dollar.

Before the first rally, Michael van de Poppe, a full-time trader at the Amsterdam Stock Exchange, said bitcoin could trade between $10,700 and $10,800.

The trader stressed that if the dollar slows down, the $11,200 to $11,400 range could be a reasonable target. He wrote:

“Great, we’re waiting here. Looks ready to test $10,700-10,800, maybe even $11,200-11,400 if the dollar falls for a while.” (Coin Circle Mozi)