The price of Bitcoin (BTC) has surpassed $13,745 and is now en-route to the next major resistance level. Traders have suggested that $13,875 is the nex key short-term area for BTC for two major reasons.
First, Bitcoin peaked at $13,970 on Jun. 26, 2019. Technically, the previous peak achieved more than a year ago still serves as an important area for sellers.
Second, technical analysts say that the weekly candle chart of Bitcoin shows $13,875 as the next “logical resistance.”
The major factor will be how Bitcoin price responds to tapping the highly anticipated resistance level and it is likely to pave its short-term performance until the end of 2020.
Should investors expect a major pullback near the $14K level?
In the past several days, calls for a major Bitcoin pullback have increased as the market sentiment turned euphoric.
Historically, even amidst strong bull cycles, Bitcoin saw healthy corrections that further strengthened its uptrend.
Edward Morra, a popular cryptocurrency trader, said he expects a reaction from the market at $13,875. The last time BTC tested that level 16 months ago, it saw a massive price drop in a short period.
This time, traders do not anticipate a deep rejection but a strong reaction is expected from BTC and the wider market. Morra said:
“On high time frame chart this weekly level ~$13,875 is next logical resistance. It rejected 2019 rally pretty hard, second test will be less violent but I believe there will be a reaction. Taking out that ’19 high into weekly supply is one to watch for.”
In the past week, Bitcoin has tested many key resistance levels in a short span of time. Yet, it has breached the levels with ease, consolidating above each one, and demonstrating a stable rally.
For buyers, the ideal scenario for Bitcoin would be to rise above $13,875 and remain stable above it. Such a pattern would indicate a healthy reclaiming of a multi-year resistance level, which is very optimistic.
Additional factors behind Bitcoin’s momentum
There are two fundamental and macro factors that could catalyze Bitcoin’s momentum in the near term: decoupling and the dormant supply.
As Bitcoin investor James O’Beirne pointed out, BTC convincingly decoupled from the U.S. stock market in October.
Due to the lack of stimulus, the uncertainty surrounding the 2020 election, and the sharp rise in COVID-19 cases, the U.S. stock market has dropped steadily. At the same time, BTC has rallied strongly and the sentiment surrounding the digital asset has improved significantly.
According to CoinMetrics, the dormant supply of Bitcoin held for at least 1 year has hit an all-time high. The researchers said:
“The % of BTC supply held for at least 1 year has never been higher. This is bullish for BTC, especially considering this metric historically peaked during periods where price was at local lows.”
The confluence of positive fundamentals, macro, and technical factors, along with an optimistic high time frame technical structure, raise the probability of BTC testing $13,875 without a massive corrective movement.
Author: Cointelegraph By Joseph Young