Bitcoin has mostly been trading around the $50k mark for the past 5 days as the larger market trajectory is mostly bullish and the new year is approaching. After 3 rallies on the short-term chart, BTC’s trajectory has finally reached a higher high with the price safe above the $50k mark.
However, with retail euphoria low and futures markets overheated, is the recent trajectory really a bull run or just a bull trap before the year ends?
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Bitcoin Sustains Above $50K CZK
The price seems to be reaching the upper limit after the recent rally from $45K to $51K in the past 4 days. On December 24, BTC retested its 21-week moving average (WMA) after bouncing up from the 50 WMA on December 21.
Source: Trading View
Resistance above $53,350 will be the first hurdle BTC faces if it breaks through the 21st WMA. However, to sustain the rally, the price needs to make a higher high or low over the next 3 days.
Bitcoin’s In and out of money indicator shows that around 513k addresses that bought nearly 382k BTC at an average price of $53,203 are still at a loss. If the top crypto breaks out of this range and closes the day above $53,200, the majority of HODLers will enter the safe zone, reducing selling pressure.
The source: IntoTheBlock
What is the problem?
With Bitcoin still trading around the $50K mark, both bulls and bears are “on par” at the time of writing. However, the overhead resistance levels are relatively weaker, while the support zone is stronger, paving the way for the price to rise if bulls can push for more.
Net unrealized profit/loss (NUPL) turned positive on December 20, indicating that the network is in a net profit position. Normally, the NUPL signal recovering to the green confidence denial zone is an effective indicator of the beginning of a rally.
Source: Glassnode
Additionally, the 30-day and 365-day Market-to-True Value (MVRV) are both below zero, meaning there is little chance of a flash crash of magnitude in the short term.
However, with retail traders wiped out, leverage has hit a recent all-time high. In fact, large deposits into Binance could constitute a potential bull trap even if the larger trend shows accumulation.
The source: CryptoQuant
Furthermore, as the futures market looks overheated with open interest, leverage increases, and retail investor sentiment remains neutral, the size of the market could tilt to either side. any.
Looking at the current state of the leverage ratio, it is likely that the price will plunge like June 2021. However, there is still a chance of stopping it if BTC maintains an upward trajectory over the next few days as the market enters the new year.
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