Bitcoin’s price is still trying to reach $18,000, but the short consolidation phases of the current trend have led some analysts to expect a top blow-off.
Bitcoin’s price continues to move rapidly towards $18,000 and many traders are calling for the market’s main digital asset to surpass the 2017 record high of $19,763. Unless you’re a bearish player, reaching a new all-time high is excellent, but ideally, for a sustainable rally to keep pace, a bullish trend in the form of ladders is better than a sudden rise.
Bitcoin’s price has risen 375% since Peter Schiff wrongly proclaimed his exact floor
In the last few weeks, BTC’s price has risen continuously without seeing long periods of consolidation or major declines.
Daily chart of the BTC/USD pair. Source: Tradingview
The chances of a blow-off top are increasing
A pseudonymous trader known as „Squeeze“ specified that the lack of consolidation periods in Bitcoin Evolution has been a trend since late October and hinted that this may stifle the momentum of the current upward movement.
3 reasons why the Bitcoin price reached $17,000, marking a new parabolic upward trend
While Bitcoin’s momentum has been solid, the price has also increased almost six-fold since the March drop. When the price of BTC continues to rise without major corrections, the likelihood of a major setback increases. The trader wrote:
„Consolidations are getting shorter without much setback. The blow-off top will come soon“.
Bitcoin consolidation phases and rallies . Source: Twitter
Peter Brandt, a well-known veteran trader who is also aware of the BTC price action, made a similar point earlier this week. Brandt noted that in previous bull runs, BTC experienced nine corrections before reaching a high.
In the current uptrend, at least to date, Bitcoin has experienced two major corrections. Compared to historical uptrends, BTC has experienced considerably smaller corrections. He wrote:
„During the 2015-2017 bull market in Bitcoin $BTC, 9 significant corrections occurred with the following averages: 37% drop from high to low. 14 weeks from one historical high to the next. Since the low of the beginning of September there have been two corrections of 10%“.
Since the fall of November 8th, the price of Bitcoin went from USD 14,344 to USD 17,858 in Binance. In only ten days, BTC saw a profit of approximately 25% with a clear consolidation phase.
These 3 reasons explain why the price of Bitcoin recovered quickly after falling to USD 15,700
The pattern of a rally followed by occasional consolidations and corrections is key to seeing a prolonged rally, as it neutralizes the futures market and decreases the possibility of a blow-off top.
In technical analysis, a blow-off top refers to when the price of an asset falls suddenly and abruptly. As an example, BTC saw a blow-off top after the 2017 high. In the 52 days that followed, BTC’s price fell almost 70%.
They will evaluate the current Bitcoin bull market in a virtual meeting
As Bitcoin approaches a price discovery phase above $20,000, traders expect BTC to drop before it can reach $20,000. But there’s a possibility that this trade will be saturated, as many analysts seem to anticipate a similar scenario.
Futures funding rates are neutral
One variable that could make the rebound continue in the short term is the funding rate. In the main futures exchanges, the BTC futures funding rate is 0.01%.
JPMorgan says Bitcoin is slightly overvalued as a commodity
Futures exchanges in the crypto market implement the mechanism called „funding“ to achieve balance among traders.
When most traders in the market have long positions in Bitcoin, the funding rate becomes positive. If this happens, holders of long contracts (buyers) have to incentivize sellers and vice versa.
- Major futures exchanges, such as Binance Futures, show a funding rate of 0.01%, indicating that the current rally is not overextended.
- LedgerX releases physically settled Bitcoin mini futures
- Ultimately, traders still expect Bitcoin to see a top blow-off when the price approaches USD 18,000.