The real hurdle facing Bitcoin is $ 20,000, close to its all-time high (ATH). Even though record highs have just hit spread among major exchanges, we’ve got new ATH nonetheless.
However, whales have not withdrawn BTC from exchanges at the rate they have been doing in recent months. At the peak of this trend, cash flow into stablecoins also slowed. The combination of the two trends can cause BTC to pullback close to $ 20,000.
What happens when the price goes above $ 20,000?
In the short term, $ 20,000 could be a hard-to-break level, creating a new range from $ 19,400 to $ 20,000.
However, if enough buyer demand is, it could exceed $ 20,000. Whales tend to sell when there is highest liquidity in the market. Therefore, if whales sell, BTC will drop near or above all-time highs. CryptoQuant CEO Ki Young Ju said:
“I think short-term discounts are based on active sales of miners and whales on exchanges and no withdrawal from them. But I know enough stablecoin reserves on the exchange will break $ 20k this year. If rejected at ATH, it could plummet because whales will sell a lot of BTC”.
Shortly after Bitcoin surpassed $ 19,800 on Coinbase and other exchanges, BTC saw a strong sell-off to around $ 19,100, as Ki predicted.
But, if Bitcoin breaks past $ 20,000, it means it will enter the price discovery zone.
In technical analysis, the term price discovery refers to a situation in which the price of the asset reaches a new high. Since there are no historic levels of resistance this should allow Bitcoin to seek a new ceiling.
As a result, there is no specific high that Bitcoin will head for when it crosses $ 20,000. The options market appears to be expecting a range of 36,000 to $ 50,000 which is the next highest level for BTC.
With BTC above $ 19,500, all the circulating supply of Bitcoin is profitable, which is a sign of the strength of the current bull run.
What will keep Bitcoin above $ 20,000?
There’s a lot of pressure to sell and short at around $ 19,800. Considering short contracts transform into buyer demand as the short sellers close their positions, this could further drive BTC up.
Cantering Technical Analyst Clark said:
“If the market continues to stand here, it will happen soon. The large selling volume has just appeared, enough to force us to increase ”.
Analysts have also hypothesized that since Bitcoin continues to rise during US time, institutions are buying BTC using the Average Price over Time (TWAP) algorithm.
If the trend is maintained, there will be a systematic buyer’s need for BTC over the short term. Institutional demand has continued to increase after prominent investors like Paul Tudor Jones have allocated a portion of their capital to Bitcoin.