Bitcoin (BTC) price hit $ 19,469 on Coinbase, its highest point since its peak in December 2017.. Although the dominant cryptocurrency is on the verge of breaking its record, there are some warning signs to watch out for.
Three reasons Bitcoin faces the possibility of retracement to $ 20,000 is: a bullish trap, general resistance, and an overloaded derivatives market.
A possible bull trap scenario
A cryptocurrency trader called “Bitcoin Jack” who predicted the Bitcoin floor in March presented a possible bull trap scenario.
The term “bull trap” refers to a technical pattern where late buyers or long contract holders are caught when the price of the asset falls.
If bitcoin is rejected from the $ 19,200 to 19,300 range, the trader suggested it A possible withdrawal is likely. He noted that the $ 16,000 level would remain a compelling level of macro support.
Regarding the possible forecast of the Bitcoin Jack price trend, a trader known as “NekoZ” emphasized that such a trend is possible. The wrote::
“It’s scary to see the levels drop to 12,000 as my levels consolidate between 16 and 18,000. But yes, it is very possible that the resistors will not break normally on the first try. Shown by the previous PA on the way up. “
$ 20,000 is an important level of resistance for Bitcoin
When Bitcoin cracks $ 20,000, it will be included in pricing when looking for a new cap. Above $ 20,000, there is no historical data or evidence to suggest that BTC would hit a maximum price.
In theory, BTC could achieve multiple goals that many executives and industry analysts have shared over the past year. Most predictions range from $ 25,000 to $ 100,000 for the current cycle.
Hence, there is a significant interest on the part of the sellers to aggressively defend Bitcoin so that it does not exceed $ 20,000.
The financing rate is extremely high
Sellers may find it attractive to add to positions below $ 20,000 due to high funding rates.
In the major cryptocurrency exchanges, The Bitcoin Perpetual Swap Contract Financing Rate is between 0.05% and 0.1%. This means that buyers or long-term contract holders pay short sellers a large portion of their positions as fees.
Given the very positive funding rates, short sellers may find it attractive to aggressively shorten the region from less than $ 20,000.
An active OTC market is a variable
Still heOn-chain data shows that the OTC (over-the-counter) market is active. This generally suggests that whales, investors, and high net worth institutions could buy bitcoin.
Ki Young Ju, CEO of CryptoQuant, said that while some fixes could be made, it is likely to exceed $ 20,000. Ki said::
“The OTC markets are still active. The $ BTC cash flow index hit its three-year low a few days ago. Only 3% of transactions are used for currency deposits / withdrawals on the network. We could have fixes but I think it would break the 20k at some point. “