Bitcoin analysts warn of bull trap

Updated: 2 years

Bitcoin (BTC) has been able to rise nicely in the last 24 hours and market sentiment is immediately changing. Fears abate, the market regains hope and there is even talk of the start of a new bull market. However, there is a good chance that people are cheering far too early. Is there a possible bull trap?

Bitcoin price rises by 4%

The bitcoin price was hovering just above $19,100 yesterday morning and then began to climb significantly. Bitcoin briefly encountered resistance around $19,500, $19,800 and of course $20,000, but broke through all three levels quite quickly.

Bitcoin peaked around $20,400 last night, but then held steady around $20,200. This morning BTC tested $20,400 again, but again failed to break through. At the time of writing, the BTC price has dropped below $20,000 again, reaching $19,900 on KuCoin and €19,250 on Bitvavo. This means that the BTC price is still up 4% today.

Bitcoin support holds up

A few weeks ago, Whale Map indicated that just above $19,000 is an important boundary, as a lot of BTC was bought around that price. So this price held up for the time being, but bitcoin is actually still moving in the same range that prices have been stuck in for over two weeks now. In this market of HODL’ers, there is still a great lack of new buyers.

Nevertheless, this gives confidence that bitcoin can continue to rise in the short term. We may then see a test of the $24,000 mark soon. However, it seems likely that bitcoin will fall again after that and that we will also soon see a retest of the recent low below $18,000, if not even a new lower low.

How the price moves today may depend heavily on how the US stock markets open later today. Indeed, equity markets like the S&P 500 remained closed yesterday due to the US holiday. Still, SPX premarket futures are already green, which may be a good sign given the high correlation between SPX and BTC.

Bitcoin reserves on exchanges increase

However, analyst IT Tech shows that bitcoin reserves on exchanges are rising sharply and that is usually a very bad sign. It could mean that these BTC are about to be dumped on the spot market. That will likely create even more selling pressure.

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