Bitcoin’s (BTC) price hit $9,260 on Feb. 20 and dropped to $9,350 on BitMEX the very next day. Analysts say these two pullbacks were liquidity fills and that the dominant cryptocurrency is likely to sustain its bullish market structure.

Technical analysts and industry executives have laid out the exponential moving average golden cross, strong weekly support at $9,500, halving, liquidity fills and rising on-chain activity as the five main factors to support the continuation of Bitcoin’s upsurge over the coming months.

Factor #1: The golden cross

A golden cross on a candlestick chart occurs when a short-term moving average line meets a long-term moving average line. When the golden cross is supported with high volumes, it often indicates that a significant upsurge is near. One cryptocurrency trader pointed out that the last time a golden cross occurred in the Bitcoin market, Bitcoin’s price went on to see an extended rally from the $4,000s to $14,000.

At the time, the golden cross was also preceded by a 10% fall, causing fear in the market before the run up. Theoretically, the pullback before the rally leads more short sellers to add to their positions, causing a short squeeze when the market spurts upwards.

The cryptocurrency market is heavily swayed by short and long squeezes in the margin trading market. When positions build on platforms like BitMEX and Binance with high leverage, a large market buy or sell can liquidate hundreds of millions of dollars worth of contracts, creating massive volatility.

However, there is speculation that the golden cross and the dreaded death cross are not as efficient and accurate as laid out to be. When the golden cross was implemented in equities trading over a period of eight years, it showed varied results, demonstrating that the indicator is not a reliable signal as a trading strategy.

The last golden cross in the Bitcoin market occurred on Dec. 9, 2019, and the market did not enter an extended rally for over a month after it flashed. Hence, while some traders remain generally bullish on the formation of the golden cross for the first time since December 2019, historical data suggests its reliability still remains uncertain.

Factor #2: Strong weekly support at $9,688

As emphasized by popular cryptocurrency trader Cred, Bitcoin’s price has been at a critical point throughout the past two days, sitting on a heavy support level of $9,688. A close below the $9,688 level on the daily and weekly candlestick charts of Bitcoin would indicate bearish continuation for the cryptocurrency.

However, if the Bitcoin price successfully holds above that level throughout the next two to three days, the analyst noted that it is likely to signal a bullish continuation. Cred said:

“Close below yesterday’s high [$9,688] equals bearish continuation likely. The corollary of this view: If price pushes through, I’d expect aggressive sellers to puke and price to unwind higher to $9,800–$9,900. That’d be an early signal of weekly bullish continuation.”

Although the retesting of the $9,688 support can be considered a bearish event, given that the failure to maintain it as a support could lead to a steep correction. Traders foresee BTC targeting higher resistance levels like $10,900 and $11,500 when defended.

“Break and hold $9,800 on high time frames, and I'll turn short-term bullish. Until then, whales are just playing with your emotions,” cryptocurrency trader Josh Rager said, reaffirming that the market structure remains uncertain.

Factor #3: Halving

Bitcoin’s block reward halving scheduled to occur in late April has been the most important narrative around the cryptocurrency market throughout 2020. Technical analysts remain divided on whether the halving is priced into Bitcoin, and whether the lead up to the halving could cause Bitcoin’s price to rally without significant pullbacks. Binance CEO Changpeng Zhao said that he does not believe the halving has been priced into Bitcoin.

The halving is one of the few fundamental factors that can have an immense impact on Bitcoin’s price trend because it affects the supply of the asset. Given that the main value proposition of Bitcoin is its fixed supply, any event that affects it is likely to have a large effect on the price.

The block reward halving on the Bitcoin blockchain network happens every four years, but there is a widespread belief that many retail and institutional investors, especially newcomers, are not fully aware of the implications. Zhao explained:

“I personally believe the halving has not been priced in just looking at price. This is a personal opinion, and I could be very wrong. I think the market is not efficient. We think everybody gets all the information immediately, and they absorb it and understand it, but that doesn't happen.”

After the halving, Bitcoin mining will not be profitable unless its price goes over the breakeven point. The price of mining can be adjusted if fewer miners are active on the network. Historically, the Bitcoin blockchain network has not seen an extended period go by with a decline in its hash rate. For that reason, the price reacting to the halving rather than the hash rate responding is more likely. The TradeBlock research team wrote in a paper:

“The gross cost to mine one Bitcoin at projected levels following the halving would be $15,062. If we adjust our assumption on hash rate and assume hash rate stays nearly flat from current levels, then the cost to mine one Bitcoin would fall to $12,525.”

There is a possibility that Bitcoin’s price can drop after the halving and still have minimal effects on the hash rate because large miners operate with long-term contracts with electricity providers and equipment manufacturers. In that scenario, miners would be unwilling to sell the Bitcoin they mine, further causing the supply in the market to drop, potentially pushing the price up.

Factor #4: Bitcoin liquidity fills, or flash crashes

Prior to the recent drop, Adaptive Fund’s on-chain analyst, Nik Yaremchuk, said that Bitcoin’s price could dip to as low as $9,300 to fill liquidity. At the time, Yaremchuk suggested a minor correction that Bitcoin’s price was at around $10,300:

“We got a little pullback, as according to Volume Heatmap, we got stuck in the loop of a large volume location. I think the picture looks weak now, and I expect a decline to $9.5K–$9.3K where there is a stronger support loop.”

Liquidity fills, like the drop to the $9,300s on Feb. 20 and 21, are often considered early signs of bullish continuation, as it provides the ongoing rally a stronger floor or support. When an asset spikes up vertically without any supportive pullback, it’s typically met with a steep correction. Short-term pullbacks in an uptrend establishes a solid footing for an asset to climb up over an extended time frame.

Factor #5: On-chain activity

According to Willy Woo, general partner at Adaptive Fund, the breakout above the $10,000 level was “the real deal” because it was backed with high on-chain investor activity.

Investors like CNBC’s Brian Kelly and Fundstrat’s Thomas Lee have used fundamental factors such as address growth and overall blockchain usage to forecast cycles in the Bitcoin market. In previous bull cycles, an extended Bitcoin rally was preceded with a rise in on-chain investor activity, prompting analysts like Woo to believe that $10,000 is not the local top for Bitcoin.