Bulls Buying Bitcoin Make Price Drop Again
Bitcoin bulls have hit the $19,500 level for the second day in a row, to shift the crucial resistance level to support.
Every attempt to break through resistance has been rejected near $19,550. However, since declining to $19,050 on December 14, Bitcoin’s rapid rally shows that investors remain keen to buy each significant drop.
At the moment, the general consensus between traders is that converting $19,500 in support will provide a possibility of a new all-time high of $20,000 or higher. According to Michael van de Poppe, a full-time day/swing trader in cryptocurrencies, it is more important to see the $19,400-19,500 area turn into support rather than reaching a new all-time high.
Van de Poppe further emphasized that the current bearish concentration in the daily time frame is unconfirmed. He noted that if the price of Bitcoin does not regain $19,500 as strong support, the possible outcome is for the price to fall to $18,500, where the traders will look for a better entry.
Even if Bitcoin has trouble holding on to $ 19,500, the daily chart shows that the price continues to make higher lows daily. Since rebounding from the December 11 dip to $17,586, BTC has also set higher daily peaks. It is a future sign that the digital asset is in a strong uptrend.
CoinMarketCap stated that the overall cryptocurrency market capitalization is now $ 566.6 billion, and Bitcoin’s dominance rate is 63.6%.
Bitcoin price consolidated before resuming the uptrend in 2021
BTC is close to its all-time high of around $20,000. Still, there are compelling reasons to expect more side action.
On-chain analysts primarily examine two indicators to gauge sentiment for an ongoing rally. These are the Spent Output Profit Ratio, or SOPR, and the long-term holder MVRV. The SOPR indicator shows whether short-term holders are selling at a profit or a loss. If the SOPR increases, investors are selling at a profit. It typically means there is room for a minor correction. But if the SOPR declines, retail investors are probably shaken up, and an uptrend reversal is possible to follow.
Long-term holders MVRV is an indicator that studies whether Bitcoin is overvalued or undervalued. The MVRV divides the price at which investors buy Bitcoin by the current market capitalization. It allows the indicator to estimate whether investors accumulate BTC at an abnormally high price, causing the rally to overheat. If the MVRV goes above 20, a rally becomes unsustainable.
Bitcoin is currently in an ideal position. The SOPR indicator signifies the probability of a further retracement in profit-taking, while the MVRV indicates a long-term rally. This trend is positive for BTC since it shows that the general uptrend would possibly remain intact even if there were a short-term correction or periods of consolidation.
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