‘First phase of bull cycle?’- Here’s why Grayscale is now bullish on Bitcoin

On Wednesday, the 22nd of April, Bitcoin rallied to $78.4K on the Binance exchange, marking a new high since early February. 

The crypto asset was now up 30% from the February low of $60K. According to the Grayscale Head of Research, Zach Pandl, BTC may have hit a ‘durable market bottom’. 

He noted that BTC has stayed above $74K, which coincided with the realized price of buyers who bought three months ago. 

Pandl added that if BTC surges further, more buyers would be in profit, reducing selling pressure. According to him, this could be an indicator ‘marking the first phase of a bull market.’

Will Bitcoin extend its rally above $80K?

The asset manager has joined a list of market bottom calls, from Fidelity to the treasury firm Bitmine Immersion’s Tom Lee.

For Lee, the ‘mini crypto winter’ was close to ending based on the recovery of the S&P 500 Index and its correlation with the sector’s past bottoms. 

In fact, the short-term outlook still looks positive, and the $80K level could be an insight for BTC bulls. Notably, the funding rates have been surprisingly negative despite the recent rally. Put differently, leveraged short-sellers were piling up and expected a pullback. 

However, such set-ups also accelerate a short squeeze that has lifted BTC and could continue to do so. The next key magnetic liquidity pools with short-sellers were $79.3K and $85K. These could be potential targets if the short squeeze trend extends. 

But James Coutts, chief crypto analyst at Real Vision, had a contrarian take. According to Coutts, there could be another drawdown before an actual cycle low, citing a market breadth indicator that tracks over 200 crypto assets. 

Overall, the market bottom could be in for Bitcoin; however, the asset could still drop lower before extending its recovery. 

Final Summary

• Grayscale said BTC may have printed a ‘durable market bottom’, citing reduced selling pressure and the break-even status of buyers who bought three months. 
• While a short squeeze could push BTC higher in the near term, an analyst cautioned that there was still a chance for another drawdown.