The market is experiencing a significant Santa Claus rally, with Bitcoin maintaining a robust position above the $38,000 level. Yet, it’s anticipated that investors might begin selling off their Bitcoin holdings as the price reaches a 19-month peak. Following this, Bitcoin has seen a notable selloff from its recent high of $39K, leading to questions about its present health.
Short-Term Traders Turn Bearish
Bitcoin price has touched a record high after 1.7 years, with the price touching $39,000 today. Additionally, the Open Interest has also reached a 19-month high of $17.5 billion. As BTC price rose from $37.5K low, over $35 million worth of positions were liquidated, with short-positions getting liquidated nearly $31 million.
Nevertheless, with the price facing rejection above $39,000, traders rushed quickly to lock their profits, resulting in Bitcoin experiencing a liquidation of around $2.8 million. This decline appears to be a temporary volatility, as the outlook from options data remains bullish and the potential approval of a spot ETF is on the edge.
Data from Deribit derivatives exchange shows a rise in call options over puts for Bitcoin, suggesting investors’ hopes for its price increase in early 2024. Deribit shows a declining put-call ratio, especially for March and June 2024 expiries, indicating a bullish market trend.
Additionally, the Netflow for Bitcoin continues to hover around a negative region, currently at -670 Bitcoin. This suggests investors are now increasingly withdrawing BTC from exchanges, signaling a ‘hodling’ sentiment.
However, the current sentiment among short traders is turning bearish. Coinglass data indicates that the long/short ratio is falling below 1 to 0.7934. This suggests that approximately 56% of positions are now expecting a price drop. Despite this, bulls remain hopeful, maintaining 44% of positions as long, countering the rising selling demand.
What’s Next For BTC Price?
Bitcoin managed to surpass the $38,000 resistance and successfully met the $39K level. However, sellers were quick to open short positions near this level, resulting in minor pullbacks. As of writing, BTC price trades at $38,777, surging over 2.7% from yesterday’s rate.
Repeatedly testing a resistance level often leads to its weakening. If buyers can maintain Bitcoin’s value above the recent breakout level, the chances of a surge towards $40,000 increase. However, this price could face a notable challenge as sellers are waiting for their final move.
If sellers aim to stop this upward trend, they need to rapidly lower Bitcoin’s price below the 20-day EMA and the current uptrend line. This action could trigger a drop to the firm support level of $34,900. A robust recovery from this point might result in the Bitcoin price remaining within the $34,800 to $38,000 range for some additional time.
With rising moving averages and RSI trading just below the overbought region, Bitcoin now gives an advantage to spot buyers.
The post appeared first on Coinpedia
