Bitcoin (BTC) traders identify order books from major exchanges that show the $ 19,500 level to be a near term resistance level.
Bitcoin rejects $ 19,500 for now
On November 25, the price of Bitcoin was rejected at $ 19,500 with relatively large volume on the major spot exchanges. On Binance, for example, the price of BTC hit $ 19,484 before seeing a slight pullback to below $ 19,300.
The minor rejection likely occurred due to the stacks of sell orders between $ 19,450 and $ 19,550.
A popular pseudonym trader known as “Byzantine General” shared order books from all major exchanges which listed $ 19,500 as a key area for sellers.
– Byzantine General (@ByzGeneral) November 25, 2020
Bitcoin researcher Vijay Boyapati also said that the $ 19,500-19,550 range remains the last selling wall before a new all-time high.
Let’s go. Past that baby wall, most of the past trades of all time are going to be eliminated very quickly pic.twitter.com/7E0gmgdgpD
– Vijay Boyapati (@real_vijay) November 25, 2020
If Bitcoin does not test the $ 19,500 area again in the next few hours, it could mean another drop is likely. Considering this would be the last resistance until the new all-time high, traders expect some reaction from sellers.
Another small pullback would benefit Bitcoin as it further neutralizes the funding rate for futures contracts. The funding rate for BTC futures rose again to 0.07% on Binance Futures and other exchanges.
Given that Bitcoin’s average fund rate is 0.01%, another short-term drop to reset the derivatives market could even strengthen the upward momentum.
Shorts being at levels not seen since April is a variable
However, one variable to consider is that the number of shorts in the Bitcoin market is at its highest since April 2020.
In March, the price of Bitcoin fell below $ 3,600. After that, it continued to climb, eventually exceeding $ 19,000. The rally gathered pace in April when short contracts hit an annual high.
The likelihood of a short squeeze increases as the number of short contracts in the market increases. A short tightening occurs when the price of an asset continues to rise despite the presence of significant selling pressure.
This trend pushes short sellers to buy their positions in the market, which further fuels the demand to buy in the market. A pseudonymous analyst known as “Cactus” wrote:
“BTC shorts are at their highest since April 2020 …”
If the number of shorts continues to increase, this would also cause the funding rate for futures contracts to drop. In a way, this could make the rally more sustainable in the medium term.