For the past three years, Bitcoin did not see a rise that it is seeing at the current moment. And, it was for the first time in 2020, that it has price has reached up to $19,469 and brought a smile to a number of faces. However, according to the trends, you may not get an opportunity to witness this happiness frequently.
With this sudden hike in its price, many individuals are assuming that it is set to cross all the records however, there are things that you should note down.
One of the main reasons why you are being warned of this scenario is because of a bull trap. Apart from this, overhead resistance and a jammed fake market scenario may make it difficult for Bitcoin to meet our expectations.
What is the potential bull trap scenario?
Yet another false cryptocurrency trader which is known as “Bitcoin Jack” put forth a potential bull trap scene in the month of March. Now, the point which comes to the mind of investors is that what is the actual meaning of “bull trap”.
This term refers to a technical pattern according to which all the late buyers, as well as the holders who were waiting for long, get trapped by others when the price seems to drop.
With that known, a trader made a thoughtful comment by saying that this kind of trend is possible. “NekoZ”, the trader himself made a comment that witnessing BTC going at the 12k level is depressing for him as he never thought its price would remain between 16-18k.
For Bitcoin, $20,000 is a major resistance level
If Bitcoin surpasses this level of hike, it is sure to enter the price discovery trend while it searches for a new hike. Also, there is no such trend that would hit that BTC will go beyond $20,000.
However, many theories suggested that the Bitcoin industry would see a great spike and according to different predictions, the price may surge up to $25,000 to $100,000 if the continues to go high.
Also, the funding rates are quite high
The sellers may find it difficult to sell Bitcoin at the price below $20,000. This is because the funding rates of Bitcoin are comparatively higher. If we look at the trend of different Bitcoin Exchanges, we get to know that buyers or other contract holders are paying the sellers a huge fraction of their positions as fees.
However, based on the on-change record that the OTC market is still active which means that investors with a high net-worth would be the only ones who would purchase Bitcoins. Apart from this, big institutions can also think of purchasing Bitcoins.
On this, the CEO of CryptoQuant made a statement saying that “OTC markets are still active. $BTC Fund Flow Ratio hit the three-year low a few days ago. Only 3% of transactions are used for exchange deposits/withdrawals on the network. We might have corrections, but I think it would eventually break 20k.”