The price of Bitcoin (BTC) surpassed $16,000 relatively easily on November 13, and has remained resilient above it. Analysts are divided on the short-term prospects of BTC as the momentum is still strong, but there are concerns about an overheated rebound. However, there are many positive developments that can continue the upward trend of BTC.
Generally, trading activity in the cryptocurrency market is increasing in all types of exchanges. The spot, derivatives and institutional markets have all seen a significant increase in investor demand. Denis Vinokourov, head of research at the cryptocurrency exchange and broker Bequant, said in an interview with Cointelegraph that the overall increase in transaction volume is positive:
“Looking at the trading volume of retail-centric cryptocurrency venues shows that there has been a significant increase in interest among these market participants. However, at the same time, in more regulated venues, especially CME Group̵7;s trading volume and Open interest (OI) is also growing steadily.”
In the recent rebound, the substantial increase in trading volume in the cryptocurrency market has been a key catalyst for Bitcoin. On-chain market analysis platforms, such as CryptoQuant, have reported large deposits of whales. This means that high-net-worth investors have increasingly sold BTC in the past week because its price exceeded $16,000. Nevertheless, the dominant cryptocurrency was able to maintain its momentum and rose to a high of $16,480 on November 13.
The substantial increase in trading volume and the continuous flow of stablecoins into exchanges usually means that the demand for Bitcoin is rising. Therefore, the main driving force for BTC’s rebound above $16,000 is likely to be the emerging demand for BTC due to high trading activity and stablecoin inflows. After breaking through $16,000, analysts are generally bullish, especially on the medium-term trend of BTC. However, some people are still cautious about the immediate impact.
Bitcoin’s bull market in the short term
The price of Bitcoin has exceeded $16,300 in just the past 12 days throughout history. When looking at the data on the chain, IntoTheBlock analysts pointed out that there is almost no resistance between $16,300 and $18,750. If BTC rebounds to $18,750 in the short term, there will be a small gap until the new all-time high exceeds $20,000.
Analysts said that based on market orders and on-chain levels, the $15,170 area may become a new support area in the short term. The company found that 860,000 addresses purchased 465,000 BTC near this level, marking it as a key support. This means that if BTC remains at a comfortable level above $15,170, it will lay the foundation for the next bull market. But if it falls below this level, a sharp correction may occur.
Although on-chain and technical factors are conducive to the excessive rebound of Bitcoin, traders have also expressed concerns. Above $16,000, the road to new highs is fairly simple. Therefore, traders expect sellers to try to keep the price at around $16,000, which will lead to a consolidation phase.
But technical analysts pointed out that Bitcoin’s momentum may be too strong to see a sharp correction. Cryptowatch charting expert Kevin Svenson (Kevin Svenson) said that FOMO buyers may take over the market. The upward momentum of BTC is strengthening, especially as it continues to see a stepped rebound.
Svenson pointed out that BTC may be rejected in the future. Analysts still stated that BTC may reach $17,000 to $18,000 before the correction occurs: FOMO buyers have already taken the market…remember. We may be entering a field of “excessive prosperity”… Hope that rejection will overwhelm FOMO buyers. ”
Other traders also said similarly that Bitcoin’s drop below $15,500 on November 12 may be a “decline.” After reaching $15,965, BTC suddenly dropped nearly 4% to $15,440. After the correction, BTC returned to $16,000 and then continued to break through the terrible resistance level cleanly. Based on this price trend, an anonymous trader named “Loma” said that there may be a sharp correction in the short term. The trader pointed out: “Guess it is down. I don’t think it makes sense to test the $15,800 area again.
Recent bear case
Bitcoin’s short-term bearish scenario still revolves around positive market sentiment. Analysts still expect BTC to rebound before the end of this year, but in the short term, they expect a callback, because historically, BTC has experienced a callback throughout the bull market cycle. For example, in 2017, when BTC rose to $20,000, it would usually see a rejection rate of 20% to 30%.
Michaëlvan de Poppe, a full-time trader at the Amsterdam Stock Exchange, said that Bitcoin is at an “incredible stage.” Short sellers and skeptics are increasingly inclined to BTC because it has reached an all-time high. However, Poppe pointed out the possibility of a 20%-30% correction in an upward trend. He explained that if these callbacks occur, they may bring huge opportunities.
“I do agree with the statement that we are at an incredible stage. When $BTC is only 20% away from the new all-time high, it is difficult to explain other things. In any case, the 20% to 30% correction is revised to a huge opportunity to buy relatively “cheap” BTC. Take it. “
Bitcoin technical analyst Josh Olszewicz mentioned that the Ichimoku Cloud indicator points out that BTC is much higher than the cloud. This indicates that BTC may have been overbought and has risen well above its support level on the higher time frame chart. The analyst said that the $13,200 level is still an area of interest to buyers.
No short-term contract liquidation?
In the foreseeable future, one variable of Bitcoin price trends is the unusually low number of short-term contract liquidations. For example, when BTC exceeded $16,000 on November 13, only short liquidations worth about $13 million were recorded on Bitfinex and BitMEX. Compared with the previous cycle, Binance Futures and other exchanges have relatively low short liquidation volumes.
Vinokourov believes that the tediousness of short liquidation may mean that the Bitcoin market is in a healthy state. This shows that the brief squeeze is not the main catalyst for the BTC rebound. On the contrary, real spot market demand and institutional appetite may cause the price of Bitcoin to rise. As Vinokourov pointed out, when the market is less dependent on futures markets that support high leverage, BTC is less vulnerable to falling volatility.
“The strange thing is that there is a lack of short liquidation for a reasonable reason-the total OI may be at a record high, but the higher gains are actually driven by stablecoin margin futures rather than margin bitcoin. Because of the aforementioned stablecoins Risk exposure, so there is no Bitcoin risk exposure. Therefore, the market is in a healthier state compared with the situation where there is no transfer to stablecoin margin products.”
Bitcoin’s dependence on the derivatives market has declined, and it has clearly broken through the resistance level of $16,000 and a combination of various data points on the chain. These data confirm that $15,170 is an important support level for BTC, which increases the possibility of an upward trend. At the same time, due to the historical trend of BTC even seeing a sharp correction in the parabolic rally, traders are preparing for a potential sharp drop to buy on dips. In any case, BTC’s medium-term prospects remain positive, especially towards the end of the year.