The first and largest cryptocurrency, Bitcoin (BTC) climbed to a new all-time high of $27,521 today, Dec .27. The main catalyst behind Bitcoin’s broader rally was noted to be the high institutional demand for BTC.
An analyst ascribed a short-squeeze caused by sellers who sold close to the prior high to be the likely primary reason for the Bitcoin surge to highs past $27,500. Derivatives data indicated that above $131 million worth of Bitcoin futures contracts were liquidated in the last 24 hours.
Meanwhile, analysts generally remain bullish on Bitcoin’s price trend. Traders are also becoming cautious about shorting Bitcoin because it hasn’t peaked yet. Until BTC reaches a certain peak, the chances of a further rally in the near term remain high. Michael van de Poppe stated:
“The higher we go, the higher the next impulse move will bring us. If $25,800 is this temporary top, next impulse could bring $BTC towards $40,000+.”
The next logical top for Bitcoin is likely to be when institutional buying of Bitcoin slows down, as can only be indicated by the CME Bitcoin futures market volume and grayscale BTC inflows.
BTC/USD Daily ChartBitcoin presently trades at $27,413 after reaching highs of $27,521 on Coinbase.
Some analysts believe Bitcoin is reaching a mid-term peak as the market becomes extremely overbought. A trader with the moniker “Pentoshi” recently stated:
“Early warning signs for me are the duration of each consolidation getting shorter with the rallies themselves being shorter. I wouldn’t be surprised to see a 30% correction in the next 4-5 weeks at some point towards 19-20k.”
Pierce Crossby of Tradingview recently stated when asked about the possibility of recycling of profits back to Altcoins when BTC cools down, he stated that he remains unsure about the Altcoin scenario:
“Unfortunately for ‘Alt lovers,’ Bitcoin is on a stronger footing relatively speaking.”
Some analysts’ opinion also coincides with that stated above that since Bitcoin is seeing a rally led by institutional investors, the profits from Bitcoin will not cycle back into the Altcoin market this time around.
On the other hand, some traders expect Altcoins to become more attractive as Bitcoin rallies. A pseudonymous trader known as “Salsa Tekila” stated that profits will recycle back into Altcoins if Bitcoin continues to surge, considering that Altcoins historically performed well in January after BTC surged in December buoying the argument that “Altseason” might not even come till Q1 2021.
Renowned analyst, Michael van de Poppe, highlighted that traders are presently skeptical about buying Altcoins due to the market dynamics with the XRP saga contributing greatly to this. A pseudonymous trader earlier noted that the negative sentiment around XRP could spill over to other Alts in the near term. The trader wrote:
“XRP tanks and all Altcoins tank against Bitcoin. I’m holding my ETH spot bag and not catching knives against momentum on levered Altcoin perps. IF $BTC goes crazy towards $30K, Altcoins dive down. Wait for Bitcoin parabola before punting IMO. XRP news bad for Altcoins, perhaps.”
The moment Bitcoin was trading above $20K, it subsequently stepped into the price discovery. Altcoins usually become stagnant when Bitcoin enters the price discovery because BTC absorbs volume from the Altcoin market.
In the near term, it is critically important for the Altcoin market to see Ethereum gain traction against Bitcoin. This will likely kick off the next Altcoin season if it happens in the near term.
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