The price of Bitcoin (BTC) is now stagnating below USD 19,000 after four failed attempts to break out of the USD 19,600 resistance level. In the short term, four factors suggest a relapse is more likely than a pure breakout of the all-time high price near $ 20,000. Traders and technical analysts tend to be cautious about Bitcoin’s short term price trend, seemingly waiting for BTC to establish a clear support level or get past its all-time high.
There are four factors that make a correction likely, and all of these factors could add to the selling pressure on BTC while buyer demand for Bitcoin declines in the near future. The price of BTC falling along with the stock market could go further reinforce nervousness around risky assets, including Bitcoin.
On December 8, the price of Bitcoin fell particularly hard in a short time. On Binance, Bitcoin fell from $ 19,294 to $ 18,610 in just 12 hours. A pseudonymous merchant known as a ‘Byzantine General’ established an 857 BTC buy order for $ 18,750 on Bitfinex, which equates to $ 15.94 million. However, the order disappeared as the price approached $ 18,750 suggesting it was a fake order.
As the USD 18,750 buy order faded, the support level declined and Bitcoin eventually declined to USD 18,610 on major exchanges. For nearly two weeks, the USD 18,500 – USD 18,600 range has served as a strong area of support for BTC. If Bitcoin continues to decline below USD 18,500, traders say the USD 16,000 support level could be tested before BTC’s next rally. Another pseudonymous trader known as “Crypto Capo” said that below $ 18,500 a bearish move could occur in the near term, possibly up to $ 16,750.
The USD 19,500 – USD 20,000 resistance area is a major roadblock
For traders, Bitcoin is currently in an unfavorable position as it is both far from the resistance level and the main support area. So far, BTC has remained relatively comfortably above the USD 18,500 support level for the past week, following three successful recoveries. But with constant re-testing of the same support area, buying or demanding BTC for $ 18,500 has become less attractive.
As such, a trader known as “Salsa Tekila” said the ideal trade is to either buy Bitcoin at the low support, such as $ 16,000 or $ 17,000, or above $ 20,000. The trader said that it makes more sense to trade the current price range in the short term until BTC decisively hits above its all-time high or sees a deep correction.
Likewise, Koroush AK, a cryptocurrency trader, said that a “decent dip buy opportunity” would emerge at a lower support level, focusing on the USD 18,300 – USD 18,400 range as a potential support area. Still, the trader noted that some lower timeframe candles should close, such as the four-hour candle, to gain more clarity on Bitcoin’s price cycle, adding, “Still waiting for the 4H close, but it appears that we are “going down, which would provide a decent buying opportunity.”
Miners sell Bitcoin
According to data from CryptoQuant, miners who were previously inactive started selling Bitcoin again. In a private message to their clients, analysts said the Miner’s Position Index hit a new annual high. This indicates that miners are exerting selling pressure on Bitcoin, which increases the likelihood of further consolidation or a larger price drop.
In the cryptocurrency market, there are two main sources of external selling pressure: miners and exchanges. Willy Woo, analyst on the chain previously explained that miners selling BTC and exchanges selling their fee income are two of the biggest unmatched selling pressures on the market. Taking this into consideration, miners who continue to sell BTC as Bitcoin struggles below a major resistance level make a short-term breakout a challenge. CryptoQuant’s note read:
“The Miner’s Position Index, MPI, which had remained negative for most of this year, has recently hit a moving average of 1.5, a new record for this year. Looking at historical patterns, this is not so high that we expect the bull market to end, but it may be enough to cool things down for a short period of time. “
“OG” investors don’t buy
Bitcoin holders who have been hoarding large amounts of BTC for a long time have also stopped buying BTC in recent days. CryptoQuant analysts noted that ancient whales “want the price to drop, or at least expect it to,” based on data points in the chain.
Whale clusters on Whalemap, an on-chain analytics platform that tracks Bitcoin whale activity, show a similar trend. On Dec. 7, Whalemap analysts said the whale clusters show three short-term support areas at $ 18,979, $ 17,651 and $ 17,170.
Whale clusters arise when whales accumulate or buy Bitcoin at a certain level and don’t move the BTC. It essentially shows where whales last bought BTC and at what price level they are willing to hold BTC. As BTC fell below $ 18,979 on Dec. 8, whales could try to bid or buy in the last two support areas.
The stock market is shrinking
During the pre-market trading session on December 8, the Dow Jones Industrial Average and the S&P 500 recorded a small decline. The stagnation of the major US stock market indices comes after weeks of recovery. JPMorgan Chase said the US stock market could see a downturn in January if the craving for US stocks turns into a crowded trade.
As the stock market begins to show signs of a momentary slump, the ‘smart money index’ reached an annual low. The index gauges the sentiment of money managers and institutional investors, who appear to be skeptical of the ongoing rally. It indicates that the stock market rally was fueled by private investors, which could be a worrying trend if a correction occurs in January.
Based on several factors, including whale inactivity, the sell-off of miners and uncertainty in the risk-on-market, analysts remain cautious in the short term. CryptoQuant noted that retail investors are active, but whale caution remains a negative variable for Bitcoin: “In the short term, Bitcoin seems likely to continue to consolidate or undergo another correction. Retail investors are very active, but the whales are moving in a way that does not help Bitcoin rise. “
But the bullish momentum can continue, with Rafael Schultze-Kraft – Chief Technical Officer at Glassnode – sketch USD 18,640, USD 18,450 and USD 17,655 as major short term support levels based on on-chain data. As long as the price of Bitcoin remains above these three levels and the aforementioned whale clusters, the dominant cryptocurrency could avoid a deep correction to the $ 14,000 – $ 16,000 range.