Bitcoin’s short trip to $ 13.2,000 suggests a profit-taking price correction

Bitcoin (BTC) price topped $ 13,000 for the first time since June 2019. The optimism about PayPal’s support for buying cryptocurrencies meant that general market sentiment improved in a short period of time.. Immediately after the PayPal news report was reported, the peak price of Bitcoin rose from $ 12,300 to $ 13,200. Although the medium-term outlook for the cryptocurrency market remains positive, analysts are not ruling out the possibility of a withdrawal.

Bitcoin is up 25.5% in a 13-day period since October 8th. Initially, BTC’s rally began with the profits of Altcoins and DeFi tokens arriving in BTC. Some industry players such as Sam Bankman-Fried, CEO of the futures exchange FTX, uncovered a cautious stance on DeFi tokens admitting that a short trade of 200 Net Yearn.Finance (YFI) was placed, which equates to about $ 2.75 million. While shorts likely didn’t cause DeFi to drop, it did show that the mood around DeFi is easing.

However, analysts are somewhat cautious about the immediate development of the Bitcoin price. The vast majority of BTC holders are making profits, which could result in investors taking money as they earn. BTC is also approaching $ 14,000, which was a major level of resistance for BTC as early as mid-2019. In June 2019, when BTC hit $ 13,970 on Binance, it quickly fell back to $ 10,525 the next day. Over the next 21 days, BTC fell to $ 9,252, down 35%.

Is profit coming close?

Bitcoin’s short trip to $ 13.2,000 suggests a profit-taking price correction
Bitcoin’s short trip to $ 13.2,000 suggests a profit-taking price correction

Guy Hirsch, CEO of eToro’s US trading platform, told Cointelegraph that the PayPal news is “very important” as prominent investors and venture capitalists, including Chamath Palihapitiya, chairman of Social Capital. they reflect a similar feeling. The venture capitalist He said that all major banks “Bitcoin support meeting“.

The cryptocurrency market has been particularly optimistic about the prospects for PayPal to incorporate cryptocurrencies for two main reasons. First, Support for Bitcoin from another major payments conglomerate, Square, continues. Secondly, reaffirms the perception of cryptocurrencies as an established asset class. Although the positive sentiment regarding the news was short-term, Hirsch said there could be a decline, followed by a steady increase:

“This increased adoption is likely to drive prices higher, but I think it is too early to fully understand the implications of this announcement on the markets and you would not be surprised if profit-taking resulted in prices Fall below. Deadline before starting a slow and steady ascent. “

Denis Vinokourov, head of research at the exchange and broker Bequant, believes that consolidation, at least in the short term, would result in a healthier uptrend for BTC rather than an exponential rally. There is little resistance between $ 14,000 and $ 20,000 as the previous bull cycle of 2017 will end abruptly. However, according to Vinokourov, this does not mean that the road to a new all-time high is easy.

When 98% of Bitcoin addresses have advantages, such as reported Glassnode researchers, a profit-taking period is inevitable. Whether new inflows of money into the Bitcoin market would offset profit taking by existing investors and scammers is the short-term variable. Hence, cash inflows are becoming a very relevant statistic right now, having recently dropped to an annual low. According to Vinokourov, if cash inflows rise again, it would mean a decline in profit-taking. Added:

“Overall, markets are approaching an area that doesn’t offer much in terms of pricing potential. However, for healthy markets, one would expect consolidation rather than exponential one-way traffic.”

There is a strong likelihood that BTC will see a continuation of its current rally after a brief period of consolidation, as all Bitcoin markets, including spot, derivatives and options, have high demand for PayPal messages, according to Skew. Skew analysts they said: “Bitcoin shows strong activity in the spot, futures and options markets following PayPal news. Great sessions“.

The next area for BTC in the medium term?

If Bitcoin sees a decline in profit taking and consolidates, analysts expect BTC’s next range to be between $ 12,500 and $ 13,500, and to stay there until the next break for the next several months.. The $ 12,500 level is important as it has acted as a strong resistance level and the fact that BTC remains above the level confirms this as a stronger support zone. The $ 13,500-14,000 area has been a strong multi-year resistance area.

However, a narrow area below a major resistance level that has been pushing BTC down for nearly four years puts BTC in a positive position and sets a new record, especially on the next breakout. Another variable for BTC is whether new capital continues to flow into Bitcoin or is diversified in the altcoin market. If the former happened, it would increase the likelihood of a rally in BTC by the end of the year.

There are two likely catalysts that could lead to another outbreak of the next Bitcoin range in the medium term. Another major financial institution could announce support for BTC or provide a fraction of its capital for BTC, which piques the interest of retailers. Institutional demand could also affect the retail and spot markets, which are already experiencing high daily trading activity.

For example, Binance’s Bitcoin / Tether (USDT) trading pair has processed a volume of $ 1.3 billion in the past 24 hours. While the open interest of the CME Bitcoin futures market has also increased along with the volume of LMAX Digital and Bakkt, this indicates an increase in volume in the institutional markets and the spot markets. Looking ahead to 2021, the remarkably growing interest in Bitcoin is likely to steadily increase the appetite for the market’s leading cryptocurrency.

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