Bitcoin Pulls Back After Bull Run, Could Test Support at $19.7K
• Bitcoin lost steam the previous day and is poised to re-test its support levels in the coming days.
• Short positions were piling up as Bitcoin trended to the upside, leading to half a billion dollars in liquidations.
• Bitcoin may continue to trend upwards but at a slower pace, with critical supports at $19,600 to $19,700.
The past 24 hours have seen Bitcoin market sentiment take a turn, with the number one cryptocurrency by market capitalization losing 3% of its value. This comes after Bitcoin recorded a 16% profit in the last seven days and was seen as a result of favorable macroeconomic winds and high upside liquidity from overleveraged short traders.
The biggest obstacle for Bitcoin in the short term is the presence of these short positions. Over the past week, the market has taken out over half a billion dollars in short positions, allowing BTC to continue its climb. Now, however, these positions have been liquidated and over-confident long positions have become the target, potentially pushing Bitcoin back to its critical supports at $19,600 to $19,700. This level has confluence with the 200-Day Simple Moving Average (SMA) and 50x leverage longs, creating a high liquidity pool that could be taken by market movers.
On higher timeframes, a recent report from QCP Capital has suggested that macroeconomic winds might change and negatively impact the crypto market in the long run. 2023 kicked off with global markets rallying due to the US stimulus package and vaccine distribution, however, this could eventually lead to market exhaustion and risk-on assets such as stocks and Bitcoin could face bearish pressures.
As of now, investors are advised to tread carefully in the cryptocurrency market and keep an eye out for any shifts in the macroeconomic landscape that could have an effect on Bitcoin’s price. Despite the recent pullback, Bitcoin remains the best performing cryptocurrency in the top 10, and if the market conditions remain favorable, it could continue to trend upwards in the coming days.