The price of Bitcoin continues to move rapidly towards $ 18,000 and many traders are demanding that the most important digital asset in the market pass the 2017 all-time high of $ 19,763. If you’re not bearish, making new all-time highs is great, but ideally, For a sustainable rally to keep up, an upward trend in the form of stairs is better than a sudden rally.
In recent weeks The price of BTC has risen steadily, with no long periods of consolidation or major declines.
The likelihood of a blow-off shell occurring increases
A pseudonymous trader known as “Squeeze” stated that the lack of consolidation periods in Bitcoin has been a trend since late October, suggesting that it could stifle the momentum of the current upward move.
While Bitcoin’s momentum has been solid, its price has increased nearly six-fold since the March crash. If the price of BTC continues to rise without major corrections, the likelihood of a major pullback increasesor. The dealer wrote::
“The consolidations are getting shorter without much retreat. The blow-off top is coming soon.”
Peter Brandt, A well-known veteran trader who is also aware of BTC price trends took a similar point earlier this week. Brandt noticed that In previous bull runs, BTC saw nine corrections before hitting a high.
In the current upward trend, Bitcoin has seen at least two major corrections so far. Significantly smaller corrections have been made to BTC compared to historical uptrends. The wrote::
“During the 2015-2017 bull market in Bitcoin $ BTC, 9 significant corrections were made with the following averages: 37% decline from high to low. 14 weeks from one all-time high to the next. Since the low in early September, there have been two corrections of 10%. “
Since the November 8 crash, the price of Bitcoin at Binance has risen from $ 14,344 to $ 17,858. In just ten days, BTC recorded an increase of around 25% with a clear consolidation phase.
The pattern of a rally followed by the occasional consolidation and correction is key to a sustained rally as it neutralizes the futures market and reduces the possibility of a blow off.
In technical analysis A blow-off top refers to when the price of an asset falls suddenly and abruptly. As an an example, BTC took a discount after the 2017 high. In the 52 days since then, the price of BTC has fallen nearly 70%.
As Bitcoin approaches a pricing phase above $ 20,000, Traders expect BTC to take a dip before it can hit $ 20,000. However, there is a chance that this operation is saturated as many analysts seem to anticipate a similar scenario.
The futures funding rates are neutral
One variable that the rally could continue in the short term is the financing rate. On the most important futures exchanges The BTC futures financing rate is 0.01%.
Futures exchanges on the cryptocurrency market implement the aforementioned mechanism “Financing” to achieve a balance between traders.
When most of the traders in the markets are long bitcoin, the funding rate becomes positive. In this case, the owners of long contracts (buyers) need to create incentives for the sellers and vice versa.
The most important futures exchanges such as Binance Futures have a funding rate of 0.01%, which indicates that the current rally is not overwhelmed.
Finally, Traders still expect Bitcoin to peak when the price approaches $ 18,000. Meanwhile, technical analysts pointed out that the recent BTC price cycle shows that each rally was followed by shorter periods of consolidation.