Retracements in Bitcoin’s price chart does not both proponents anymore. For the past 6 weeks, BTC has favorably moved above each resistance and now it is faced with another hurdle at $18.5. While Bitcoin was down below $17.5k, ‘panic’ was the least of the community’s worry.
Reputed Market Analyst Cole Garner opined his thoughts on the market and suggested that there were key positives and some warning signs.
Bitcoin Top: Are we there yet?
The question on everyone’s lips is the same; where is Bitcoin topping off before correction?
Source: Twitter
According to Garner, the chance of $18.5 being a resting position is high, The analyst stated that despite Bitcoin’s crazy rally, Miner’s Position Index is still under the capitulation phase, which meant that they were not selling their BTCs yet.
Additionally, he described the current state of exchanges losing Bitcoin, which meant that people were still keeping their assets with themselves and not putting it up on the open market.
As a cautionary wind, Garger did suggest a declining funding rate, which is usually interpreted as rising bearish sentiment, with sellers expected to a blow-out at the top. However, rather than predicting the top or bottom, it was more important to understand the dynamics of Bitcoin’s current market.
A BTC rally without correction is Short-Lived
Source: Twitter
This is the weekly cycle of Bitcoin. Completely fueled with FOMO retail and without a backdrop of consolidation. Under any given market structure, it is completely erratic.
The importance of a solid correction period has been livid with Bitcoin since 2017, and 2019 was another great example. A rapid spike from $4800 to $13,800 within 68 days, led to an illiquid market for the rest of 2019. By the end of December, we were down to $6800, which was close to a 65% drop from the top.
That is where we will be headed if the rally persists.
Sooner or later, a drop for Bitcoin will arise when Whales would blow out the market at the peak to gather profits, and the higher the price carries, the steeper drop in percentage.
Source: Trading View
At the moment, Bitcoin’s witnessing a drop down to $16,000 or below $15,000 would mean a calculative price cut of under 20% which is technically ideal. A move above $20,000 would lead to a limitless rally for a short period, and following that, a possible bloodbath would ensue.
Closing above $19,000 opens a whole new trading zone for Bitcoin and without historical data, only guesses are your best bet. Hence, it is imperative that Bitcoin stabilizes and is in a familiar market before heading face-first into the unknown trading territory.
