With Bitcoin breaking through the $21k level, many crypto analysts have started projecting further rallies for the asset. One of the famous crypto strategists, Crypto Kaleo, recently gave a high price prediction for the world’s largest cryptocurrency.
His more than 550,000 speeches followers on Twitter, Kaleo says BTC is preparing for a rally to $30,000. Bitcoin last saw $30,000 during the June 2022 bear market. However, the crypto strategist believes there will be swings as Bitcoin targets $30,000, albeit from its bullish stance.
In his words, the market should expect more declines before Bitcoin hits $30,000. According to Kaleo, there would be some lows below $20,000, leading to lower positions before Bitcoin can be ready for the short squeeze.
A short squeeze occurs when crypto traders borrow assets at a certain price, hoping to sell them lower and keep the difference. These traders often use over-leveraged short positions in the futures market. However, the traders would have no choice but to buy the borrowed assets as the price momentum works against them, leading to more rallies as market makers draw in their liquidity to maintain momentum.
Kaleo is confident that the short squeeze is approaching as the BTC price has already surged above 23% in just seven days.
Bitcoin Rally could signal increased volatility
BTC has been through several bullish indicators since early 2023, bringing it to an annual high of more than $21,000. Bitcoin’s bullish rallies have boosted crypto traders’ hopes that the long-running bear market could end soon.
There is a reduction in the Bitcoin Fear and Greed Index to Neutralwhich could cause an increase in trading volume.
A huge increase in Bitcoin trading volume followed the recent price increase. Over the past week, Bitcoin’s trading volume has soared above double its original value to $10.8 billion, an increase of 114%.
An increase in trading volume often leads to a spike in volatility. The flow of Bitcoin seven-day volatility level of 2.4% is lower than the value of 3.1% in 2022, but remained stable during the recent rally. It is likely that the continuously increasing trading volume during the rally could cause a spike in volatility.
Centralized exchanges (CEXs) suffered from low trading volume, meaning lower transaction costs and revenues, including staff layoffs. Therefore, the rising trading volume is a welcome development for the exchanges and BTC traders.
Bitcoin recovery underway as realized profits and trading volume increase
According to Glassnode’s data, realized on-chain gains for BTC revert to the adjusted output profit ratio (aSOPR) value of 1.0. Some analysts think this is the critical resistance level. The aSOPR historically indicates a shift in the overall market cycle as increasing demand (trading volumes) absorb profits.
BTC’s on-chain realized profit and loss ratio has jumped above 1.0, posting 1.56 gains against the January 16 losses. This marked a reversal of the downtrend that started in May 2022. An increase in realized profit without a decrease in price indicates market strength.
On-chain analysis by Glassnode also suggests that a BTC price recovery is underway. As the market absorbs more selling pressure without a price drop, the overall fear and macro shift will ease.
Technically, volatility, trading volume and realized profits are on the rise BTC decoupling from stocks. Bitcoin’s past price action correlates with US stocks.
The correlation with equities may be due to wealth accumulation by institutional investors. The correlation has decreased as institutional investors hold less BTC and may exit the market in the future.
Featured image from Pixabay, charts from Tradingview.