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The price of Bitcoin (BTC) crossed $ 16,000 with relative ease on November 13 and remained resilient above it. Analysts are divided on the short-term outlook on BTC as momentum remains strong but there are concerns about an overheated rally. But there are numerous positive developments that could continue to support BTC’s bullish trend.
Overall, the cryptocurrency market has seen an increase in trading activity across all types of exchanges. The spot, derivative and institutional markets have all seen a significant increase in investor demand. Speaking to Cointelegraph, Denis Vinokourov, head of research at cryptocurrency exchange and broker Bequant, said the overall increase in trading volume is positive:
“Looking at the trading volume on retail-focused cryptocurrency venues, it shows that there has been a significant resurgence of interest among these market participants. At the same time, volumes and open interest (OI) have also occurred. in the more regulated offices and, in particular, CME, have been constantly increasing “.
The substantial increase in trading volume of the cryptocurrency market was a critical catalyst for Bitcoin during the recent rally. On-chain market analytics platforms, such as CryptoQuant, have reported large whale deposits. This means that high net worth investors have been selling more and more BTC in the past week as its price surpassed $ 16,000. However, the dominant cryptocurrency was able to sustain its momentum and climb as high as $ 16,480 on November 13.
A sharp increase in trading volume is consistent influx of stablecoins in exchanges generally means that the demand for Bitcoin is on the rise. Therefore, there is a strong possibility that the main impetus for BTC’s rally above $ 16,000 was high trading activity and the emerging appetite for BTC from stablecoin inflows. After the breakout above $ 16,000, analysts are generally bullish, particularly towards the medium-term trend of BTC. However, some remain cautious about the immediate effects.
The bullish scenario for Bitcoin in the short term
Bitcoin’s price has only been above $ 16,300 for 12 days throughout its history. Looking at the data on the chain, analysts from IntoTheBlock noticed that there is little resistance between $ 16,300 and $ 18,750. If BTC hits $ 18,750 in the short term, that would leave a small gap to a new all-time high above $ 20,000.
In the short term, based on market orders and on-chain levels, analysts She said that the $ 15,170 area would likely emerge as a new support area. The company found that 860,000 addresses bought 465,000 BTC near that level, which would mark it as critical support. This means that if BTC stays comfortably above $ 15,170, it would strengthen the foundation for the next bull run. But if it goes below, there is the possibility of a deep withdrawal.
While on-chain and technical factors favor an overly extended Bitcoin rally, traders have also expressed concern. Above $ 16,000, the road to a new all-time high is remarkably simple. Therefore, traders are predicting that sellers will try to suppress the price at around $ 16,000, causing a consolidation phase to emerge.
But technical analysts say Bitcoin’s momentum may simply be too strong to see a sharp decline. Kevin Svenson, Cryptowatch Graphic Designer, She said that buyers with FOMO – the fear of losing something – could have conquered the market. BTC’s upward momentum is strengthening, especially as it continues to see a scale rally.
Svenson noted that BTC may see rejection in the future. However, the analyst said that BTC could reach $ 17,000 – $ 18,000 before a pullback occurs: “#Bitcoin is simply floating upward. FOMO buyers have conquered the market … keep that in mind. We may enter. in an area of ”excessive exuberance” … expect rejection to crush FOMO buyers. ”
Other traders have similarly said that Bitcoin’s decline on November 12 to less than $ 15,500 may have been “the drop.” After hitting $ 15,965, BTC suddenly dropped nearly 4% to $ 15,440. After the pullback, BTC returned to $ 16,000 and then sharply broke through the dreaded resistance level. Based on this price action, a pseudonymous trader known as “Loma” said a strong short-term withdrawal is likely. The dealer noticed: “I guess it was the drop. I don’t think it makes sense to test an area of $ 15,800 again.”
The case of the short-term bear
The short-term bearish scenario for Bitcoin still revolves around positive market sentiment. Analysts still expect BTC to rally towards the end of the year, but expect a pullback immediately as BTC has historically seen corrections during prolonged bullish cycles. In 2017, for example, when BTC hit $ 20,000, it regularly saw rejections of 20% to 30%.
Michaël van de Poppe, full time trader on the Amsterdam Stock Exchange, She said that Bitcoin is in the “stage of disbelief”. Short sellers and skeptics are increasingly betting against BTC as it reaches its all-time high. However, Poppe identified the likelihood of 20-30% corrections during bullish trends. If these pullbacks occur, they could present great opportunities, he explained:
“I agree with the statement that we are in the stage of unbelief. It’s also hard to say anything else when $ BTC is only 20% away from a new all-time high. Regardless, a 20-30% correction is that huge opportunity to buy relatively “cheap” BTC $. Take it.”
Josh Olszewicz, a Bitcoin technical analyst, referred to the Ichimoku Cloud indicator a indicate that BTC is well above the cloud. This indicates that BTC is likely overbought and has rallied well beyond its support levels in the higher time frame charts. The analyst said the $ 13,200 level will remain an area of interest for buyers.
Are there no short-term liquidations?
One variable for Bitcoin’s price development in the near future is the unusually low amount of short-term liquidations. For example, when BTC surpassed $ 16,000 on November 13, only about $ 13 million in short settlement was recorded on Bitfinex and BitMEX. Binance Futures and other exchanges have also seen relatively low short liquidations compared to previous cycles.
Vinokourov believes lackluster short liquidations could mean the Bitcoin market is in a healthier position. It means that short squeezes are not the main catalyst for BTC’s rally. Rather, true spot market demand and institutional appetite could cause Bitcoin’s price to rise. When the market is less dependent on the futures market, which supports high leverage, BTC is less vulnerable to spikes in downward volatility, as Vinokourov noted:
“Curiously, short liquidations have been absent and there is a good reason for this: Total OI may be at a record high, but the higher surge is actually driven by marginal stablecoin futures, as opposed to Bitcoin marginal: Due to the aforementioned exposure to stablecoins, there is no exposure to Bitcoin and, as a result, the market is in a much healthier condition than it would have been if the switch to stablecoin margin products had not occurred.
The combination of Bitcoin’s declining dependence on the derivatives market, the clear breach of the $ 16,000 resistance level, and various on-chain data confirming $ 15,170 as an important support level for BTC increases the likelihood of a broader rally. At the same time, due to BTC’s historical tendencies to see big pullbacks even amidst parabolic rallies, traders are bracing for potential sharp dips to buy the dip. Regardless, BTC’s medium-term outlook remains positive, especially towards the end of the year.
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