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The price of Bitcoin (BTC) exceeded $ 16,000 with relative ease on November 13 and has remained resilient above. Analysts are divided on BTC’s near-term outlook as momentum remains strong, but there are concerns of an overheated rally. But many positive developments could continue to support BTC’s uptrend.
Generally, the cryptocurrency market has seen an increase in trading activity in all types of exchanges. Spot, derivatives and institutional markets all saw a noticeable spike in investor demand. Speaking to Cointelegraph, Denis Vinokourov, head of research at Crypto Exchange and broker Bequant, said the overall increase in trading volume was positive:
“Looking at the volume traded on retail focused crypto sites shows that there has been a significant resurgence of interest among these market players. At the same time, however, volumes and open interest (OI) in the most regulated venues and, in particular, CME, have also been steadily increasing.
The substantial increase in the volume of transactions in the cryptocurrency market has been a key catalyst for Bitcoin throughout the recent rally. On-chain market analysis platforms, such as CryptoQuant, have reported large deposits by whales. This means that wealthy investors have increasingly sold BTC over the past week, with its price exceeding $ 16,000. Still, the dominant cryptocurrency was able to maintain its momentum and hit $ 16,480 on November 13.
A sharp increase in the volume of transactions and consistent influx of stablecoins in exchanges usually means that the demand for Bitcoin is increasing. As such, it is quite possible that the main impetus for the rally in BTC above $ 16,000 has been elevated trading activity and the newly emerging appetite for BTC due to stable currency inflows. Following the breakout above $ 16,000, analysts are generally bullish, especially towards BTC’s mid-term trend. However, some remain cautious about the immediate effects.
The bullish scenario for Bitcoin in the short term
Bitcoin’s price has only exceeded $ 16,300 for 12 days in its history. Looking at the data on-chain, IntoTheBlock analysts Noted that there is little resistance between $ 16,300 and $ 18,750. If BTC rallies around $ 18,750 in the short term, that would leave a minor gap until a new all-time high above $ 20,000.
In the short term, depending on market orders and chain levels, analysts said that the $ 15,170 area would likely become the new support area. The company found that 860,000 addresses were buying 465,000 BTC near this level, which would mark it as a critical support. This means that if BTC stays comfortably above $ 15,170, it would strengthen the foundation for the next bull run. But if he falls below, there is a possibility of deep recoil.
While on-chain and technical factors favor an over-extended Bitcoin rally, traders have also expressed concerns. Above $ 16,000, the road to a new record is fairly straightforward. As such, traders predict that sellers will attempt to remove the price to around $ 16,000, causing a phase of consolidation to emerge.
But technical analysts say Bitcoin’s momentum might just be too strong to see a sharp pullback. Kevin Svenson, chartist at Cryptowatch, said that buyers with FOMO – the fear of missing out – might have taken control of the market. BTC’s upward momentum is building, especially as it continues to see a rally down the stairs.
Svenson noted that BTC could see a rejection in the future. Still, the analyst said BTC could reach $ 17,000 to $ 18,000 before a withdrawal occurs: “#Bitcoin is just floating higher. FOMO buyers have taken over the market … keep in mind. We may be entering an area of ”overexuberance” … expect rejection to come back to crush FOMO buyers.
Other traders have also said that Bitcoin’s drop on November 12 to less than $ 15,500 could have been “the drop.” After hitting $ 15,965, BTC suddenly fell almost 4% to $ 15,440. After the pullback, BTC returned to $ 16,000 and then managed to break cleanly out of the dreaded resistance level. Based on this price action, a pseudonymous trader known as “Loma” said a significant near-term pullback is likely. The merchant Noted: “I guess it was the dive. I don’t think it makes sense to test a $ 15,800 area again. “
The case of the short-term bear
The short-term bearish scenario for Bitcoin still revolves around positive market sentiment. Analysts still forecast a rally in BTC towards the end of the year, but for the time being, they expect a pullback, as historically BTC has seen corrections throughout prolonged bull cycles. In 2017, for example, when BTC rallied to $ 20,000, it regularly saw 20% to 30% rejects.
Michaël van de Poppe, full-time trader at the Amsterdam Stock Exchange, said that Bitcoin is in the “phase of disbelief”. Short sellers and skeptics are increasingly betting against BTC as it hits its all-time high. Still, Poppe highlighted the likelihood of 20-30% corrections during uptrends. If those withdrawals happen, they could present great opportunities, he explained:
“I agree with the assertion that we are in the phase of disbelief. It’s also hard to say anything else when $ BTC is only 20% off a new all-time high. Regardless of that, a 20-30% correction of this huge opportunity to buy relatively “cheap” $ BTC. Take it.”
Josh Olszewicz, a Bitcoin technical analyst, spoke about the Ichimoku Cloud indicator report that BTC is way above the cloud. This indicates that BTC is likely overbought and has rallied well beyond its support levels on higher maturity charts. The analyst said the $ 13,200 level will remain an area of interest for buyers.
Are there no short-term contract closeouts?
One variable in Bitcoin’s price trend for the foreseeable future is the unusually small amount of short-term sell-offs. For example, when BTC surpassed $ 16,000 on November 13, only about $ 13 million in short liquidations were recorded on Bitfinex and BitMEX. Binance Futures and other exchanges have also seen relatively small short liquidations compared to previous cycles.
Vinokourov believes that lackluster short-term sellouts could mean the Bitcoin market is in a healthier position. This means that short presses are not the main catalyst for the BTC rally. On the contrary, real demand in the spot market and institutional appetite could push up the price of Bitcoin. When the market is less dependent on the futures market, which supports high leverage, BTC is less vulnerable to spikes in downside volatility, as Vinokourov noted:
“Oddly enough, short closeouts have been absent and there is a good reason for that: Total OI may be at an all time high, but the rise is actually due to stable margin futures as opposed to to Bitcoin at margin. Due to the said stable exposure to the currency, there is no exposure to Bitcoin and therefore the market is in a much healthier state than it would have been if the movement to commodities at stable margin had not happened.
The combination of Bitcoin’s waning reliance on the derivatives market, the clear breach of the $ 16,000 resistance level, and various on-chain data points that confirm that $ 15,170 as a strong support level for BTC is rising the likelihood of a larger rally. At the same time, due to BTC’s historical tendencies to see big pullbacks, even in the midst of parabolic rallies, traders are bracing for potential sharp declines to buy the downside. Regardless, BTC’s medium-term outlook remains positive, especially as the end of the year approaches.
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