Bitcoin (BTC) is looking to retest its 2017 all-time high of $20,000, according to its analytical source. BTC price action is knocking down resistance levels as $20,000 gets even closer. However, many are not convinced that the Bitcoin bull run will last longer.
Bitcoin price action a breakout or fake?
As you follow on Kriptokoin.com, the leading crypto Bitcoin has crossed the $19,000 mark. Because traders are hoping for a week of fast gains to continue. BTC quickly removed sell-side liquidity overnight. Also, on-chain analytics resource Material Indicators states that the $20,000 mark could be retested. In part of a Twitter discussion on January 12, he shared the following assessment:
It looks like BTC is preparing for a resistance test again at the 2017 peak. It is not yet clear whether we will see a bona fide breakout or a fake exit. It’s time for patience and discipline.
Meanwhile, an accompanying snapshot of the Binance order book confirmed that the bulls had breached multiple sell walls. “Things have gotten interesting now,” Material Indicators added in the comments on the chart.
BTC order book data (Binance) / Source: Material Indicators / Twitter“This is a big bull trap!”
As characteristic of the current climate, others remain firmly risk-averse in Bitcoin despite gains approaching 20% year-to-date. Among them was popular analyst Crypto Capo, who classically described the current price action as “one of the biggest bull traps he has ever seen.” “The bull enthusiasm is real and the price is still below 20k,” the analyst added.
Another popular analyst, Michaël van de Poppe, similarly warned of overly optimistic reactions to BTC price performance. The analyst explained his views on this issue as follows:
Funny though, if you look at social media, it’s bull enthusiasm. If you watch the chart, you have to zoom out very far to see the whole chart. Bitcoin was $50,000 compared to 15 months ago.
Bitcoin awakens from its ‘volatility sleep’
Whatever its staying power, Bitcoin’s recent rally contrasts strongly with the apparent lack of volatility witnessed since the FTX boom of early November. For on-chain analytics firm Glassnode, such behavior was likely due to a jolt sooner rather than later, especially given that it continued through the 2022 annual candle close. In his weekly newsletter, ‘The Week On-Chain’, published on January 9, he explains:
The 2022-23 holiday period was historically quiet. Also, it is rare for such conditions to persist for long. Past cases where BTC and ETH volatility were this low preceded highly volatile market environments with past examples trading both higher and lower.
Glassnode calls this phenomenon ‘volatility sleep’. In line with this, he adds that “despite a short-term increase following FTX, on-chain activity for the two major cryptos remains extremely weak.” It also highlights the following:
Using both on-chain activity and the actual limit drops, it is possible to say that the surpluses of the second half of 2021 have been largely flushed out of the system. This process has been painful for investors. However, it brought market prices closer to the underlying fundamentals.
Bitcoin historical volatility index (BVOL) 1-week candlestick chart / Source: TradingView
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