Although Bitcoin failed to maintain the level of reaching 2020 all-time high, many traders believe it is a necessary correction for Bitcoin to reach between the $12k-$14k range. In previous cycles as well, Bitcoin has shown similar trends. Like in January to February 2020, Bitcoin rose from $7,400 to as high as $10,500 but again declined to pre-January levels in subsequent months.
Whenever BTC sees a relatively massive surge or drops, cascading of liquidations, occur, which results in significant price movements. The minor pullback over the last 48 hours has allowed the funding rates to neutralize; what this means is it has allowed the market to alleviate the long contracts and over ledged positions.
According to Michael van de Poppe, a full-time trader at the Amsterdam Stock Exchange, BTC may trade sideways between $12,200 and $11,200. Nik Yaremchuk, an on-chain analyst and cryptocurrency trader, said BTC followed similar trends in May 2019, wherein it saw two minor corrections and recorded it for several weeks of consolidation before rallying to a new high.
Bitcoin often sees historical fractals playing out as the market moves in a cycle, both in the short and long-term. Its price tends to consolidate after seeing a major rally, especially before entering a critical resistance range between $12,000 and $14,000.
Since June, a consistent theme has been building where the current Bitcoin bullish trend has been pushing down the selling pressure. As per On-chain analysts at Glassnode, Bitcoin reserves are much lower than the previous BTC top in July 2019. Currently, 2.6M Bitcoins are being held on exchanges. This is significantly lower than the last time Bitcoin hit a local-top a year ago (2.8M) and even lower than before in the sell-off in March (2.9M).
The confluence of historical fractals shows similar price action, and the continuous declining exchange reserves support Bitcoin’s medium-term bullish case.