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The price of Bitcoin (BTC) was rejected once again by the resistance level of $ 19,500 on December 4th, with traders becoming increasingly unsure of what will happen to BTC / USD.
Bitcoin’s rally continues to stall at $ 19,500
Some predict that the dominant cryptocurrency will undergo a consolidation phase or other minor correction in the near term, particularly as the US dollar is showing signs of a possible recovery.
Others, however, expect the crucial $ 18,500 support level to remain, which would likely set BTC to retest the key $ 20,000 level and a new all-time high in the near future.
In the short term, traders generally expect two major support and resistance levels for Bitcoin. First, the $ 18,500 area is key to ensuring BTC’s bull market structure holds up. Secondly, the $ 19,500 level is a huge resistance level for BTC. If BTC rises above $ 19,500, traders expect a new run to the all-time high which is currently just under $ 20,000.
Meanwhile, Bitcoin is becoming more difficult to trade due to volatility at the $ 19,500 resistance level. BTC has seen a strong sell-off every time this area was tested last week.
A pseudonymous trader known as “CryptoGainz” believes the ideal entry point for Bitcoin traders is now above the $ 19,500 resistance level. However, this may not be the case for two reasons: it puts traders at risk of a strong sell-off at the record high once again, as $ 20,000 remains a high-risk selling wall for bulls. He She said:
“The annoying thing about this price action for me is that if my offers are not met I am forced to extend the breakout, which at this point takes me to around 19.7k or higher, which means my entry will not is safe from a pullback unless there is an epic impulse move (read: 10% +) from that level. “
Whales selling below the all-time high are the only reason Bitcoin is experiencing tremendous volatility whenever it approaches $ 19,500.
CryptoQuant CEO Ki Young Ju told Cointelegraph that whale influxes hit an eight-month high as BTC got close to $ 20,000. The combination of heavily selling whales and miners puts BTC at risk of a correction, Ju noted.
In the short term, this could mean Bitcoin could face weeks of sideways consolidation or a deeper correction, according to Ki. Furthermore, he added that foreign exchange reserves are not declining as they did throughout the middle of 2020. It shows that whales could leave BTC on the exchange to sell if the price of Bitcoin rises. He explained:
“If you look at the average inflow of all trades (MA at 144 blocks), a few hours ago it hit over 2 BTC. We hit 2.5 BTC when the price was hitting $ 20k. It was an eight-month high from the big March sell-off. Looking at the average of all trade outflow (72h MA), whales no longer withdraw from trades. They hold BTC on the exchange to make them available for sale, I believe. Looking at the miner position index, the miners sell BTC rather heavily. “
The bullish case for Bitcoin in the short term
If Bitcoin rises above the strongly short $ 19,500 resistance level, buyers have a chance to regain control of the market.
A pseudonymous trader known as “CryptoCapo” She said that “the bears don’t want to see the price above $ 19,500”, while the bulls don’t want the price to drop below $ 18,500.
However, should the bulls prevail here, the $ 20,000 level would be the next – and perhaps most psychologically important – area for bears to defend in, in the near term. Other traders, such as CryptoGainz, likewise She said that $ 19,650 is the level that could trigger a new breakout for Bitcoin in the near future.
Meanwhile, MicroStrategy, the $ 3 billion business intelligence conglomerate, has just bought another $ 50 million in Bitcoin at the current price level, another optimistic factor for Bitcoin.
MicroStrategy purchased approximately 2,574 bitcoins for $ 50.0 million in cash in accordance with its Treasury Reserve Policy, at an average price of approximately $ 19,427 per bitcoin. We now own around 40,824 bitcoins. Http://t.co/nwZcM9zAXZ
– Michael Saylor (@michael_saylor) December 4, 2020
The public company first announced its purchase of $ 250 million worth of BTC on August 11, Cointelegraph reported. In September, the company bought another $ 175 million worth of BTC, bringing its BTC holdings to around 38,000 BTC. MicroStrategy doubles its purchase shows the company believes $ 19,000 could be a stepping stone to the next Bitcoin rally.
This news also comes as Grayscale has already added thousands of Bitcoins to its holdings in December alone. As Cointelegraph reported earlier this week, the Grayscale Bitcoin Trust bought 55,000 BTC in November, which is double the total amount of BTC mined that month.
Therefore, it remains to be seen whether this institutional buy could offset the bearish sale of whales and miners in the month ahead.
The short-term bearish case
Technically, the bearish scenario for Bitcoin in the coming days revolves around the support level of $ 18,500. If BTC loses support and dips below $ 18,500, technical analysts say a bigger drop could occur. Below $ 18,500, the next major macro support area is between $ 16,000 and $ 16,500, which BTC tested on November 26.
Michael van de Poppe, a full-time trader at the Amsterdam Stock Exchange, noted that Bitcoin falling below $ 18,500 would likely mean retesting the $ 16,000 support area. If BTC continues to be rejected by the $ 19,150 and $ 19,400 resistance levels, the probability of a decline will continue to rise.
Van de Poppe explained:
“And since $ 19,400 and $ 19,150 were pushed back, the low range was tested in the $ 18,500 area, tweeted yesterday. All fine and limited construction further. Break of $ 19,400 = new ATH. Losing $ 18,500 = probable $ 16,000 testing. “
As a result, the futures market has been showing uncertainty from traders over the past few days. CryptoQuant data shows that Bitcoin futures traders have been using lower leverage in recent times. This indicates that traders expect large price swings and potentially large sell-offs to occur.
Analysts at CryptoQuant found that open interest on Binance Futures is on the rise while the estimated leverage ratio is on the decline, which suggests that traders are becoming increasingly cautious and uncertain about Bitcoin’s next move.
A variable that can trigger a new BTC rally
Demands for a Bitcoin fix have increased, even from several permabulls. Raoul Pal, CEO of Real Vision Group, for example, pointed out that technicians suggest that BTC is at risk of seeing a correction. The DeMark system shows that Bitcoin’s daily chart is on track for a record 13 consecutive positive candles.
Bitcoin is potentially facing some serious technical advances … the DeMark newspaper shows a cluster on 2 13 and a 9 and tomorrow it could enter ANOTHER 13! pic.twitter.com/TNPpLfR2nH
– Raoul Pal (@RaoulGMI) December 4, 2020
But one variable that may allow Bitcoin to continue to grind upward is the Relative Strength Index (RSI) on the yearly chart. Currently, Bitcoin’s RSI hovers at 75 which means it is not yet in overbought territory.
An asset is considered extremely bought when the RSI rises above 90. Considering BTC’s general momentum, coupled with rising institutional interest, BTC bulls still have a good chance of breaking through the key resistances of $ 19,500 and $ 20,000.
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