According to Marc Principato of Green Bridge Investing, the Bitcoin bulls should be ready for a bend as soon as the crypto currency closes over $16,000.
The Managing Director has projected the level as an opportunity for traders to make some profits. He adds that they would most likely reintroduce this money into the Bitcoin market at lower levels – and warns optimists that they should not open long positions near $16,000 as a result.
„Our plan requires the unfolding of 3 things before we can take any risk,“ Principato said in a note released on Monday. „First, we need to reach a predetermined level (14,250 to 13,600). Second, we need price actions to achieve a clear structure (chart pattern, candle pattern, etc.). And third, we need confirmation.“
„Once we can measure the risk and determine a favorable probability, we will share our idea and start a new swing trade“.
On the subject of fundamental data
The statement followed the parabolic Bitcoin movement from $10,500 in September 2020 to [almost] $16,500 in November 2020. Many analysts agree that the prospects of ultra-low interest rates and endless bond purchases have brought lower yields to the U.S. Treasury. This in turn has led investors to put money into investments such as Bitcoin.
Bitcoin keeps support above the parabola.
Some also believe that a rising budget deficit, led by the U.S. government’s $2.3 trillion coronavirus stimulus package, has allowed some of the liquidity to flow into the Bitcoin ecosystem. Other bullish catalysts were institutional investments and PayPal’s decision to introduce Bitcoin buying and selling services on its payment platform.
Andrew Gonci, Managing Director of Green Bridge Investing, comments, however, that Bitcoin traders had already taken over all upside catalysts when they sent the price towards $16,500. Now the crypto currency is trading at its actual spot price – an overbought asset that requires some downward correction.
„Most people think you’re either all in or all out, but if you bought 100 million Bitcoin at 10,000 and it’s now 160 million at 16,000, you’ll probably take at least 16-32 million off the table,“ Gonci adds. „That’s what hedge fund managers think; they don’t go Hopium!“
Capital comes in record speed
Meanwhile, on-chain analyst Willy Woo believes that capital is entering the Bitcoin market at record speed rather than leaving it. He cites the realized price – a metric that measures the estimated average cost base that Bitcoin investors have paid.
Chart of BTC’s price action in recent years with a realized price analysis.
„Organic price action occurs when the BTC price is closely linked to the investors‘ capital coming in and going out. If it is an inorganic BTC price, it is dominated by short-term derivative traders“.