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- Bitcoin’s price hit a new high this week.
- A downward correction began nearing $ 20,000.
- The sell-off could be extended as BTC remains overbought.
- The fundamental picture implies that Bitcoin has strong long-term potential.
Bitcoin has had an important week. The pioneering digital currency hit a new all-time high of $ 19,915 and came in close to a crucial $ 20,000. A sustainable break above this psychologically significant level will push the price into uncharted territory and potentially trigger a massive bull run. That’s when we start singing our songs “to the moon”.
At the time of writing, BTC is changing hands at $ 19,000, having gained over 15% on a weekly basis. Bitcoin’s market capitalization surpassed $ 353 billion while its market share increased to 62.4%.
November turned out to be one of the most successful months in Bitcoin history. The price of the coin rose nearly 50% and experienced a seven-week series of bullish weekly closes.
Over 81,000 bulls injured
Bitcoin’s move to a new all-time high was followed by massive profit-taking that triggered a cascading liquidation of leveraged positions, which is a natural thing in the cryptocurrency market. According to ByBit, over 81,000 traders were expelled from the market and positions worth over 30,000 BTC were liquidated within hours. The largest single liquidation took place on Huobi, where a trader lost around $ 6 million.
Notably, the same happened during the Thanksgiving rally, when Bitcoin’s 11% sell-off was fueled by the collapse of longs on marginal trades. At that time, nearly $ 2 billion was written off within hours of starting the correction.
Historical data on liquidation of leveraged positions
Bitcoin remains fundamentally strong
From a fundamentals standpoint, the week was quite eventful, with institutional investors showing confidence in BTC’s growth and pumping the price.
Therefore, PayPal chief Dan Shulman said that cryptocurrencies could go mainstream and eventually become a daily payment tool. He believes the COVID-19 pandemic has accelerated the process of digitization and adoption of cryptocurrency.
I think that if you can create a financial system, new and modern technology that is faster, that is less expensive, that is more efficient, it is good for bringing more people into the system, for inclusion, for helping to reduce costs, for helping drive financial health for so many people… So, in the long run, I’m very optimistic about digital currencies of all kinds, he said in a recent CNN interview.
Additionally, Laurence Fink, CEO of investment management firm BlackRock, recently said that Bitcoin is gaining a lot of legitimacy as an asset class. Greater regulatory clarity and transparency attracted institutional investors who otherwise preferred to stay away from a profitable new financial instrument.
Furthermore, Bitcoin is now considered a more attractive investment and store of value than gold. Considering the seismic shifts in market sentiments, the digital currency may soon eclipse its physical counterpart. Read more details on why Bitcoin is gaining popularity by gaining traditional gold bugs.
Meanwhile, US regulators have focused on stablecoins which they consider risky to the financial system. As recently reported by FXStreet, members of Congress proposed to ban the issuance of stablecoins by private companies or individuals. They suggest that issuers of US dollar-pegged digital currencies should obtain permission from the Federal Reserve Bank, the Federal Deposit Insurance Corporation (FDIC), and other relevant banking bodies. Notably, Chinese regulators are also considering a total ban on privately-issued yuan-backed coins.
Technical indicators are gloomy
Despite the strong bullish momentum seen this week, Bitcoin is in a vulnerable position now. At least three technical indicators are flashing red, while short-term investors are cautious after the recent $ 19,900 rejection.
The TD Sequential Indicator has issued a sell signal, in the form of a red nine-candle candle, on the monthly chart, which means that the price could begin a downward correction of one to four candles. Furthermore, the price has reached an upper limit of an ascending triangle pattern with the potential to reverse its lower limit at $ 13,000 before another growth attempt.
This bearish target coincides with previous estimates of a 20-30% correction from the current excessive bullish momentum. As previously reported by FXStreet, Bitcoin’s bullish trends are often interrupted by major setbacks before a new price spike.
BTC, monthly chart
Meanwhile, data on the chain indicates that BTC faces strong resistance above the current price. IntoTheBlock’s “In / Out of the Money Around Price” (IOMAP) model shows that nearly 300,000 previously purchased addresses over 138,000 BTC between the current price and $ 19,100. Even stronger barrier cones approaching $ 19,300. A sustainable move above this area will invalidate the bearish scenario and put the bullish trend back on track.
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Bitcoin in / out of the money around the price
On the other hand, the downside is even more cluttered with support areas. A wall of potential buy orders goes up to $ 16,100. In total, more than 2.5 million addresses with around 1.5 million BTC could absorb the selling pressure and push the price higher.
Bitcoin forecast survey
Bitcoin Forecast The expert survey has improved significantly from the previous week as expectations on all time frames turned bullish. Specifically, the price predictions imply that participants were betting on Bitcoin consolidation above $ 19,000; however, they do not anticipate a turnaround greater than $ 20,000 within the nearest three months.
