Market sentiment around Bitcoin is currently mixed, but one fund manager argues that BTC could soon see another rise that will last several months.
Market sentiment around Bitcoin (BTC) is mixed, as the BTC price fell almost immediately by 10% just after reaching its previous all-time high of $19,892 on December 1.
However, some analysts and fund managers anticipate that the dominant crypt-currency will exceed $20,000 in the short term. But others are adamant that there will be another correction first, as previous bullish cycles have been recorded.
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Bitcoin records a „less than“ 10% drop
There are many compelling reasons to believe that a deeper Bitcoin correction is coming. In the past, multiple declines of 30% to 40% accompanied major upward trends, such as that of 2017. Therefore, the current BTC correction of about 10% of the new all-time high is relatively minor in comparison.
Meanwhile, Mohit Sorout, the founding partner of Bitazu Capital, argues that Bitcoin could soon enter a larger rise of several months. He noted that BTC’s medium-term outlook remains very positive despite the fact that the price has failed to break the key psychological barrier of $20,000 on its first attempt.
The price of Bitcoin dropped just before reaching $20,000, with a strong reaction from sellers in the spot market. As Cointelegraph reported, chain analysts attributed the drop to a combination of miners and whales selling.
TradingView’s general manager explains how the current cryptomoney bull market is different from that of 2017
The futures market was also affected by the initial cash sale. The derivatives market had already become oversaturated before the drop reached $23,000 on the Chicago Mercantile Exchange, along with an increase in the BTC futures funding rate and a record high fear and greed index of 95.
Since the market was leaning toward buyers, this meant that if a smaller drop occurred, the likelihood of a larger drop caused by cascading liquidations was high. This led to the drop that caused BTC to bounce off the $18,000 support area.
Is Bitcoin now on the cusp of a major break?
However, some analysts expect BTC to exceed $20,000 on the next attempt.
Specifically, Sorout pointed out the Relative Strength Index (RSI) on the Bitcoin 1-month chart. It shows that despite the recent upward trend, the RSI is at 69, which is neutral. An asset becomes overbought if it goes above 75 on the RSI. He said:
„I’m walking away and I can’t help but notice that Bitcoin is on the cusp of a really special monthly rise.
In addition, a trader of cryptomoney derivatives under the pseudonym known as „Flood“ echoed this sentiment. He said that a strong rise after a false rise to an all-time high is not unlikely. He wrote:
„The false historical maximum followed by the real historical maximum would be a classic.“
According to Mike Novogratz, the adoption of Bitcoin is the main key at this time
The possibility of a BTC price correction persists
Other traders, however, believe that the probability of a correction would continue to increase if Bitcoin consolidates below $19,000.
Michael van de Poppe, a full-time trader at the Amsterdam Stock Exchange, said the weakening momentum increases the likelihood of a reversal.
Technically, one could argue that the BTC rally is really overextended. After the last two minor reversals, lower time frame charts, such as the 4-hour and 1-day charts, show Bitcoin stepping closely above the short-term moving averages (MAs). This means that BTC is not overbought in lower time frames.
However, in the weekly and monthly charts, Bitcoin is still significantly above the short term moving averages, indicating that a large correction could occur.
As reported by Cointelegraph, some traders have said that a correction to $13,000 shouldn’t be a surprise for this reason, as previous bullish cycles have shown. If BTC falls further, the main support areas should be at the $13,000, the $13,800 and above the $15,000 in the high term charts.