Regardless of long-term outlook, nobody could criticised some investors for being dubious about further upside in the short run. After a rise of about 100% in less than three months (and a year-to-date performance of close to 190%), it was already looking good. BTC could have stabilised at or even retraced from $20,000 and remain one of the best performing assets of 2020.
Even after 12 years, though, Bitcoin still likes to surprise us. The momentum pushed prices much further up.
Was it a delayed reaction of the continuous stream of positive news? Probably. The amount of companies, financial services firms, funds and large investors looking at cryptocurrencies shows no sign of stopping. Add a large amount of leveraged shorts getting stopped out (over $1 billion of liquidation across all exchanges) and it's not surprising that we continued on.
The enthusiasm (or should we call it "FOMO"?) can naturally take us much further but, let's not forget that leverage can go both ways and as the open interest on major derivatives exchanges builds up, the temptation for large players to push prices down might become too intense to ignore.
For now and in any case, we're up. Let's see what the future holds for hodlers.
Last nights rally up through $20,000 has been relentless. Prices have marched on to north of $22,000 as Bitcoin trades into new territory.
I've added a trend channel to the chart above to provide visual guidance on some potential stopping points on the way up. Today, we have already reached the first of those points at $22,325.
Should profit taking commence, then a pull back to $20,845 will be the first area of support. Past this, $20,000 will now act as a barrier to further declines, with $19,890 sitting just below to help support the market.
It looks like crypto isn’t correlated to traditional markets, at least not during this past session.
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