Analyst: After the price of Bitcoin reaches 18,000 US dollars, it may soon “shoot higher and fall”
The price of Bitcoin is soaring to $18,000, and excited traders believe that this top digital asset may exceed the 2017 all-time high of $19,763. Unless you are a short seller, it is great to set a new record high. But ideally, in order to maintain a sustainable rise, a stepped upward trend is more advantageous than a sudden rise.
In recent weeks, Bitcoin has continued to surge without a long period of consolidation or sharp decline.
The possibility of rising and falling is increasing
The anonymous trader “Squeeze” pointed out that since late October, Bitcoin has rarely undergone consolidation, and he hinted that this may exhaust the current upward momentum.
Despite the strong upward momentum of Bitcoin, the price of Bitcoin has also risen nearly six times since the crash in March. If Bitcoin continues to rise without major corrections, the possibility of a sharp correction in Bitcoin will increase. The trader wrote:
“The consolidation time is getting shorter and shorter, there is not much correction. The rise and fall will soon come.”
Peter Brandt is a popular senior trader who also closely monitors the price trend of Bitcoin. Earlier this week, he made a similar point. Brandt pointed out that in the previous bull market, Bitcoin has undergone nine corrections until it reaches a historical high.
In the recent upward trend, at least so far, Bitcoin has undergone two major adjustments. Compared with the historical upward trend, Bitcoin’s correction is much smaller. He wrote:
“During the 2015-2017 Bitcoin bull market, Bitcoin experienced 9 major corrections, with an average of the following: from a high to a low, a decrease of 37%. The time from one high to the next is 14 weeks. Since the low in early September, there have been two 10% corrections.”
Since the drop on November 8, the price of Bitcoin has risen from $14,344 to $17,858. Bitcoin’s gains reached nearly 25% and entered an obvious consolidation phase.
Consolidation and occasional corrections after the rise are the key to maintaining the long-term upward trend, because it can neutralize the futures market and reduce the possibility of sudden peaks.
In technical analysis, the rise and fall refers to the sudden sharp drop in asset prices. For example, after Bitcoin reached its peak in 2017. In the following 52 days, the price of Bitcoin dropped by nearly 70%.
Since Bitcoin’s all-time high is close to $20,000, traders expect Bitcoin to fall before reaching $20,000. Many analysts seem to expect this to happen.
Futures funding rates remain neutral
One variable that is likely to remain up in the short term is the funding rate. In major futures exchanges, the Bitcoin funding rate hovers at 0.01%.
Futures exchanges in the cryptocurrency market use a mechanism called “funding fees” to achieve a balance between traders.
When most traders in the market are long Bitcoin, the funding rate will become a positive number. If this happens, holders of bullish contracts or longs must incentivize shorts, and vice versa.
The funding rate of top futures exchanges like Binance Futures is 0.01%, which shows that the current rise is not overheated.
Traders still predict that as the price of Bitcoin approaches $18,000, Bitcoin will eventually rise and fall. At the same time, technical analysts pointed out that the recent Bitcoin price cycle shows that there is a shorter consolidation period after each rise.
