Reasons why traders think Bitcoin price bottomed at $29,500

Bitcoin’s bounce above $32,000 boosted the mood among traders who believe the bottom is in, but some analysts caution that heavy resistance blocks the road to new highs. Traders are showing a renewed sense of hope after Bitcoin (BTC) price held onto the $32,000 range for what could be the second day in a row. 

Data from Cointelegraph Markets Pro and TradingView shows that bulls have managed to regroup at the $32,000 level where Bitcoin has hovered throughout the day but traders a patiently waiting for further confirmation that Bitcoin may be in the midst of a trend reversal before fully re-entering the market. Here's what analysts and investors expect next from Bitcoin price.

CME futures see a bullish surge

According to a recent report from Delphi Digital, an aggressive reversal was observed in the CME futures basis on July 21, and this is a bullish sign for BTC traders who scooped up 'cheap' futures contracts. The resulting contango is interpreted as bullish because the futures price is above the spot price of the asset.

As seen on the chart, the open interest for CME’s Bitcoin futures doubled from $1.25 billion on July 19 to $2.5 billion on July 20 after institutions positioned themselves “slightly net long after an extended period of being short.” While leveraged funds remain net shot as they utilize CME futures to hedge their spot exposure, Delphi Digital indicated that they have probably “closed out some amount of their positions.

Delphi Digital said: “Overall, CME’s fresh futures contract creation is a slightly bullish narrative, considering BTC had a mini pump to reclaim its range a few hours after the New York session ended. As noted above, futures basis on CME hit negative levels yesterday before posting a sizeable reversal. All the data points to people buying up futures contracts as BTC spiked below the price range it’s sat in for months now.”

Multiple zones of resistance remain in Bitcoin's path

Bitcoin’s recovery above $32,000 reignited the bullish optimism for many traders but the road ahead is by no means a walk in the park due to the multiple zones of resistance that lay overhead. According to pseudonymous crypto Twitter analyst Rekt Capital, many of the previous support levels for Bitcoin, including $35,000 and $37,000, could soon act as resistance.

At the time of writing, Bitcoin price is in the process of attempting a sustained breakout above $32,200 where the price has been stuck for most of the day. 

Exchange inflows historically spike near market bottoms

Another sign of bullishness came from pseudonymous Twitter user IzzyEibani, who highlighted the recent spike in exchange inflows as a possible sign that the bottom is in. A closer look at the chart shows that there have been three instances in the past on Aug. 1, 2017, Nov. 30, 2018 and March 12, 2020, where inflows to exchanges spiked in a manner similar to what was seen on July 16. Each time the market bottomed within a short time period following the inflows.

If the market unfolds in a similar fashion to the historical pattern, there is a strong possibility that the recent drop to $29,500 may have been the bottom.