Today was an exciting day for crypto traders because Bitcoin is sitting in the all-time high territory right now. But the crypto industry has yet to make up its mind about the new resistance and supporting levels.
On Tuesday 17th, February 2021, Bitcoin was trading above $50,000 briefly for the first time in its history. This happened during early U.S. trading hours.
There were some folks that were bullish about this and were warning people about the upcoming price correction. But most crypto-traders don’t seem to think that will be happening.
We have seen year after year that bitcoin has been trading at higher values compared to previous years. Which leads most people to believe that 2021 wouldn’t be any different. In fact, with everything else going on in the world right now, most think that this is a great catalyst for bitcoin to rise to even higher valuation.
When tracking the top 8 crypto exchanges, we noticed that the trading volume did remain flat for most of the day.
“We are at all-time-highs territory [and] the market still has to make up its mind. My opinion is that new highs [are coming] in the short term” says Alessandro Andreotti, bitcoin over-the-counter broker.
Bitcoin is reaching these highs when retail investors are showing an increasing interest in the derivatives market. With everything that happened with the Gamestop and AMC stocks, it makes sense why the retail investors will be more interested in seeing which companies are being unfairly shorted.
It does show the resistance of the crypto market though. Even after the spotlight is away from it, Bitcoin manages to get some screen-time for itself every year when it hits a new all time high.
Now that a lot of people are aware of this, it is possible that more retail investors might want to get in on the action.
But others do warn that there will be a price correction in the short term. Especially given the fact that Tesla just bought $1.5 billion bitcoin last week. It is possible that just that one thing might be the biggest reason for Bitcoin reaching an all-time high this year.
Here’s what Joel Kruger has to say about it –
“The market has gone parabolic since breaking through $20,000 and technical studies are warning of the need for a healthy pullback in the days and weeks ahead to allow for severely stretched readings to unwind and normalize.”
The problem with retail investors wanting to get in at this price, is that for almost all of them, the $50,000 price level will be way too high. And since Bitcoin is already trading at $40,000, it is possible that a majority of retail investors will wait for the price to fall back down before they get in.
According to Simons Chen, the retail investors won’t be able to push the price above the current record at least in the short term.
There is also the factor of seasonality that we have to factor in. Historically speaking, bitcoin has been trended lower in March. Usually the price stalls or we see a downturn during this month. You should expect to see that next month.
The QCP Capital expresses the same thing “The longer bitcoin stalls here without a fresh catalyst, the more we will be looking for a longer lasting downside into March. As we’ve highlighted above, the March downside seasonality followed by April upside seasonality is the strongest and most consistent seasonal pattern in bitcoin. It’s still too early now for us but into [the end of February] if volumes drop further, we will be looking for some downside protection [at the end of March].”