There are both bearish and bullish scenarios for Bitcoin for the foreseeable future. The bear cases surround two key data points: the increase in BTC deposits from whales on exchanges and the lack of BTC testing of critical support levels. Bullish cases are based on HODLer activity, address activity, the market capitalization gap between BTC and gold and the favorable technical structure of Bitcoin.
Bitcoin exceeding $ 18,500 is critical for its short-term price cycle. There were large sell orders just above $ 18,500 which acted as a strong area of resistance. In previous attempts to break above $ 18,500, BTC has dropped significantly in a short time. This time, he easily broke through the resistance level, scoring a clear breakout.
The bear’s case for Bitcoin
Despite BTC’s strong uptrend, whale data indicates that selling pressure on Bitcoin may intensify. Cole Garner, a chain analyst, cited Crypto’s Bitcoin Exchange Whale Ratio as to say: “It is likely that there is still a severed leg in the tank.” The price of Bitcoin exploded on November 18 when it rose sharply from $ 18,476 to $ 17,214 in two hours. Garner pointed out that the Bitcoin exchange whale ratio has a “history of overshoot here.”
The price of Bitcoin (BTC) has stabilized above $ 18,000 with the market showing strong momentum above what was once a high resistance level over several years. On November 20, the price of BTC hit a new two-year high of $ 18,828 on Binance, surpassing the previous high on November 18. Following Bitcoin’s breakout, analysts are divided on its future price trend.
The Bitcoin Exchange Whale ratio is an important metric for measuring whale selling pressure, as it shows the estimate of the amount of BTC wealthy investors are depositing on exchanges. Typically, investors transfer funds to exchanges when they want to sell. Wealthy investors prefer to store their funds in non-custodial portfolios that they have full control over. Therefore, analysts follow foreign exchange deposits as a potential signal for liquidation.
On top of whale data signaling minor pullback, Bitcoin’s monthly chart shows excessive upward price movement. Sasha Fleyshman, trader at institutional cryptocurrency investment firm Arca, said on November 1, the level of $ 13,716 is a crucial area. It marked the opening and closing candle prices of December 2017 and January 2018, when the price of Bitcoin hit a new all-time high at nearly $ 20,000. Therefore, exceeding this level means that $ 13,716 will serve as the primary area of macro support.
While unlikely, if a deep correction occurs, Fleyshman said he expects the “palpable” support level at $ 13,716 “to be the line in the sand support to maintain structure.” It is still unclear whether BTC will see a major correction in the near term. But in the event of a correction, Fleyshman said BTC has a large area of support to defend the ongoing bull run.
Denis Vinokourov, head of research at Crypto Exchange and broker BeQuant, told Cointelegraph that price drops similar to the recent sudden crash have already occurred and the recent drop has been met by strong demand from buyers. Therefore, although BTC has seen a major bearish move in a short period of time, he believes it is not necessarily bearish:
“Bitcoin’s relentless boom has resulted in what some may have misinterpreted as an abrupt end. However, while the price change from $ 18,500 to $ 17,200 is certainly not for the faint-hearted, similar price fluctuations in dollars occurred when Bitcoin was trading at a much lower valuation. On top of that, the selling pressure has been met with similar buying interest on the downside and, moreover, the overall open options (OI) interest is actually higher since the initial decline.
The bull case for BTC
Due to Bitcoin breaking above $ 18,500, analysts said market sentiment around Bitcoin was generally bullish. Speaking to Cointelegraph, Guy Hirsch, managing director of the United States at eToro, said it would be surprising to see Bitcoin not soon defy the all-time record. There are many positive stories – such as BTC’s support for PayPal and Cash App, as well as the growing adoption of institutions – that are brightening the outlook for Bitcoin:
“Sentiment is now quite bullish, and a number of indicators, including social media chatter, trade volumes and even webpages indexing Bitcoin-related marketing terms, are themselves at levels. records or almost – these are clear indicators that the appetite for a bull run is here; and growing adoption coming from all sides – PayPal and CashApp, Anthony Scaramucci’s Skybridge announcing his intention to buy Bitcoin and many legendary investors are also getting started.
While there have been discussions around Bitcoin’s high time charts, such as the weekly and monthly charts in November, technical analysts said the lower time charts look bullish as well. Before Bitcoin broke above $ 18,500, a pseudonymous trader known as “Benjamin Blunts” said that BTC left behind a side structure that had formed over the previous 48 hours. After the escape, the trader said this rally “should be the one that takes us back to $ 20,000 and brings us back to all-time highs.”
In addition to the many technical and fundamental catalysts for Bitcoin, there is a strong case to support an exponential growth trajectory for BTC over the long term. Mike McGlone, Senior Materials Strategist at Bloomberg Intelligence, said that with a market cap of only $ 300 billion, Bitcoin is nowhere near the market cap of $ 10 trillion of gold. But it also shows that there is a significant valuation gap between Bitcoin and gold: “Bitcoin is on track to be a digital version of #gold, but far from it in 2020.”
The next cap for BTC?
Considering the various trends Bitcoin has seen in the eight months since the March crash, Hirsch told Cointelegraph that there is a high probability that Bitcoin will test $ 25,000. If Bitcoin exceeds $ 20,000, it would mean that BTC will be looking to explore a new cap. Hirsch identified the range of $ 25,000 to $ 30,000 as the potential high for Bitcoin in the near term:
“If Bitcoin were to go above $ 20,000, there is no indication that we wouldn’t be racing to $ 25,000 before the end of the year. While I am hesitant to plant a flag in the ground and make a price prediction per se, the fundamentals behind the number of people who now have access to Bitcoin through apps like PayPal and can buy it with very little money. barrier to entry suggest that even if a fraction of these people do, the price has nowhere to go but to rise. “
However, when Bitcoin exceeds $ 20,000, there is no longer a historical context to predict the next move of BTC. Therefore, above the current historical high, it is almost impossible to predict the next high of BTC until it reaches a certain level. Another variable is that retail investors are likely to enter after BTC exceeds $ 20,000, which would add to the high level of interest and fear of missing out, or FOMO, that the cryptocurrency market is already seeing. .