Bitcoin bulls should brace for an extended upside move above $20,000, as per Josh Rager of Blockroots.com.
“Bitcoin price reclaimed previous support and looks good as long as $19,200 holds,” the prominent cryptocurrency analyst tweeted Thursday. “Watching for [the] price to slowly grind its way back up to $19,700 — reclaim and finally move over $20,000.”
Oveleveraged Bitcoin Longs
The technical outlook appeared as traders showed modest buying bias towards BTC/USD as it fell to $18,109 a day before. The plunge originated at the pair’s record high of $19,915, owing to profit-taking behavior among short-term traders. Nevertheless, it fell by $2,000 primarily because of overleveraged long positions in the derivative markets.
So it appears, traders attempted to outsmart Bitcoin’s spot rates by extending their long bets in the options market above $20,000. But as BTC/USD corrected ahead of touching the level, all those Long positions got liquidated at their respective stop losses. That prompted traders to cover their margin calls by selling their actual bitcoin holdings.
But BTC/USD fought the bearish bias back, as Mr. Rager noted. The pair closed above $19,200, a psychological resistance-turned-support level, to extend its rebound above $19,500.
Dissenting Views
Away from the technicals, an on-chain analyst differed from Mr. Rager’s bullish outlook of Bitcoin, stating that it would be difficult for the cryptocurrency to close above $20,000 soon.
Ki-Young Ju, the CEO of CryptoQuant, noted that institutional inflow into the Bitcoin market stopped after its price topped out. It reflected that traders/investors with higher investment range stopped accumulating Bitcoin, which means the cryptocurrency should either consolidate sideways or trend lower.
“This $20k battle would be BTC OG whales versus retail investors,” he said. “And I’m on their side, short-term bearish. I know on-chain data can’t tell the inflows of institutional spot bids. But it looks like current BTC whales (OGs) stopped their move that was good for the bull rally.”
Mr. Ju further also noted that whales are now keeping their Bitcoin at exchanges, pointing to their likelihood of selling the cryptocurrency instantly at its next local top.
The comments follow many traders’ prediction of a 30 percent price drop. However, their long-term outlook for Bitcoin remains bullish against an inflationary outlook in the US.