17.01.202312:51 Forex Analysis & Reviews: Bitcoin maintains positions near $21k: will bullish movement continue?

Bitcoin paused its bullish run near the $21k level due to a significant increase in bearish volumes. Sellers have maintained strong pressure on the asset's price for the third day in a row, but so far, without success. Buyers manage to keep BTC/USD quotes above $21k.

At the same time, the price of Bitcoin tested the $20.5k–$20.8k area three times over the past three days, which may indicate its likely breakdown in the near future. The confident positions of buyers may allow the cryptocurrency to continue its upward movement to the levels of $21.5k–$22k.

CryptoQuant analysts believe that not all institutional investors share the general euphoria. The company's experts came to the conclusion that a significant part of large investors expect an increase in BTC trading volumes in order to return to the market.

At the same time, Bitcoin continues to update the historical maximum of mining difficulty. The indicator rose by 10.3% and exceeded the mark of 270 EH/s. Keeping the price above $20k makes the economic situation easier for mining firms, but the high cost of energy resources may encourage companies to sell BTC at a bargain price.

Bitcoin and the stock market

The activation of trading activity is also observed in the stock market, where the main assets show strong growth. The market's flagship index, the S&P 500 Index, maintains correlation with Bitcoin and updates local highs.

Most likely, the current dynamics of the stock market price movement will continue, as Goldman Sachs reports on the active closing of short positions. After many months of falling, such movements of investors look like an adaptation to new realities.

And this means that after several large liquidations, the belief in a bullish trend has strengthened. This means that we should soon expect a local correction or a change in trend towards local low.

BTC/USD Analysis

Bitcoin has been holding positions near the $21k level for the third day in a row. Also, the cryptocurrency is in a continuous upward trend for 17 days straight. BBG experts note that the relative strength index on the daily timeframe has reached the zone of a two-year extreme zone.

This confirms our conclusion that Bitcoin is locally overbought. Despite this, buying volumes remain at a high level, and the unsuccessful attempts of the bears to push the price below $21k are clear evidence of this.

At the same time, note that the price slowed down the upward movement and faced large sales volumes. First of all, this is due to the achievement of the key zone, from where the BTC price began to decline towards the local bottom due to the collapse of FTX.

Also, do not forget that the index of fear and greed has just begun to grow in the direction of greed, and there is a large layer of bears on the market, ready to open short positions. The market has been acting in a certain way for almost 10 months, and one massive bull rally is not going to change things quickly.

On the daily timeframe, the formation of the bullish "cup-and-handle" pattern is being completed. The price completes the "handle" element, after which it can be argued that Bitcoin is able to reach the $28k level following the results of the current bull run.

At the same time, the technical metrics of the cryptocurrency remain in the overbought zone, but are increasingly turning in the flat direction. This is due to the growing pressure of sellers, as well as overbought cryptocurrency.

Results

Bitcoin confidently holds positions near the $21k level, which allows betting on further growth of the asset's price. Given the overheating and other third-party factors, a correction will catch up with Bitcoin near the $21.5k–$22k level.

The corrective movement may start earlier, and the market should be ready for a new plunge below $20k. The current growth has provoked the appearance of a large number of orders below $20k, and therefore we should expect a further drop in price to at least $18k.