Bitcoin began August on a wrong note, down more than 13% the largest cryptocurrency was sent tumbling to about $50,000 usd within just a few days. These can be attributed to a number of factors, from the vanishing yen carry trade to economic concerns related to the United States and other such issues.
On the contrary, two key on-chain indicators are suggesting that BTC could be strong for the long run.
Positive outlook for long-term options
One inarguably key indicator of optimism is the persistent bullish sentiment in the long-term Bitcoin options market, according to data from cryptocurrency platform Amberdata. As seen in data provided by cryptocurrency platform Amberdata, Bitcoin's 180-day bid-ask spread remains highly elevated, indicating expectations of a price increase over the next six months.
It measures the difference in demand for what's called "call options" (allowing you to buy Bitcoin in the future) versus "put options" (allowing you to sell it). The greater the bias, the more an investor is willing to pay for call options rather than puts , a good sign the price of Bitcoin will rise.
Call options would enable purchasing at a price fixed into the future, while put options give you the opportunity to sell the cryptocurrency at a predetermined price. The nature of positive bias at this moment , for an increased price in Bitcoin - shows optimism for the long-term success of the cryptocurrency.
Other technical indicators and historical trends
For now, a sharp and dramatic drop in Bitcoin and an RSI below 30 could mean it oversold, which could propel a very fast recovery. In the record, such situations have been followed by recoveries, and thus, Bitcoin may stabilize or even rise in value within days.
Over a longer period, the Bitcoin price appears to be trending upward in a trend channel. Within that, notable support resides around $45,000, while some resistance exists at $70,000. According to this uptrend, despite there being temporary drops, the trajectory of the price of bitcoin would have been upward.
The trend it seems, at the moment, is going the same way that Bitcoin reacted during the market crash of March 2020. It had dropped a lot and then gained sharply as the economy started picking up again. When the current crisis is sorted out, if things start getting back to line with stability, the likelihood is that Bitcoin will make a recovery like before.
In a nutshell, Bitcoin will fluctuate in the short term but prospects for the long term do seem quite bright. Hence, investors and speculators should thus be cautious during turbulence but also at the same time never forget the monstrous potential that Bitcoin has in the run.