Connect with us


Bitcoin’s price rally: Watch out for this if you choose to jump in



Source: Pixabay

Bitcoin’s price registered a palpable spike earlier today, contributing to altcoins registering a similar bullish outlook. While this impulsive move is impressive, it could be a short-term bull trap before BTC revisits its 24 February levels.

Back to the pavilion

Yes, Bitcoin’s price rallied by 9.6% today, but looks can be deceiving. Why? Well, because despite the allure of riding a bull wave, the daily volume seems to be down in the dumps. In fact, the volume did not cross the 50-day moving average. Although the daily candlestick has a few more hours before it closes, it has not even surpassed yesterday’s value – A day during which Bitcoin’s price returned only 1.95% gains at the close.

Supporting this questionable pump is the lacklustre performance of the Open Interest. The Open Interest has increased by roughly $3 million over the past 24 hours to $359 million. This development indicates that the recent spike did not have a proper backing with large orders, suggesting that is built on shaky grounds.

Hence, there is a good chance BTC will preemptively reverse the uptrend and catch bulls off guard. 

Source: Santiment

From the looks of it, this upswing will be likely to reverse the trend around $42,894 and return to sweep Monday’s low at $37,154. In some cases, BTC’s price will fill the fair value gap (FVG) present between $36,330 and $36,967.

A bounce around this area will be key to triggering a 23% move to tag the lower limit of the weekly demand zone, extending from $45,550 to $51,860.

Source: BTC/USDT on TradingView

What do these metrics say?

Since this run-up is a short-term bull trap, investors can expect BTC to kick-start a massive bull rally at around $37,000 to $36,000. Backing this outlook is the recent surge in interest from both retail and high net-worth investors.

The number of wallets holding between 1-100 and 100-10,000 BTC have been accumulating since 1 February. In total, the number of addresses of the first category termed retail grew by 15,000 and the second category by 200. 

This spike seemed to suggest that retail is starting to accumulate dips and is slowly flipping bullish on Bitcoin.

Source: Santiment

All in all, the short-term bull trap is something that investors need to be mindful of.

Bitcoin’s price will most likely be rejected at around $42,894, resulting in a steep correction. This will allow market makers to farm the long positions by liquidating them.

Read the best crypto stories of the day in less than 5 minutes

Subscribe to get it daily in your inbox.

Please select your Email Preferences.

Jibin is a news editor at AMBCrypto. With over three years of experience as a political writer, he primarily focuses on the political impact of crypto developments. A graduate in Law and International Relations, his writing is by and large focused on cryptocurrencies from the political and financial perspective. A Liverpool FC fan. YNWA

Disclaimer: AMBCrypto's content is meant to be informational in nature and should not be interpreted as investment advice. Trading, buying or selling cryptocurrencies should be considered a high-risk investment and every reader is advised to do their own research before making any decisions.