Bitcoin played it safe and has approached the $ 50,000 mark in the past five days as the larger market trend looks mostly bullish for the New Year. After three short-term rallies, BTC’s trajectory has finally reached a higher level, with prices safely above the $ 50,000 mark.
However, with little retail excitement and an overheated futures market, it remains a topic of debate whether recent price is really a bull run or just a bull trap before the end of the year.
The total BTC runs over $ 50,000
Bitcoin’s price appears to have hit its cap after the recent rally from $ 45,000 to $ 51,000 in the past four days. On December 24th, BTC retested the 21-week moving average (WMA) after rising from the 50 WMA on December 21st.
Source: Transaction Perspective
The overhead resistance of $ 53,350 will be the first hurdle BTC faces when it breaks above the 21 WMA. However, for the rally to continue, BTC needs to hit higher highs or lower lows in the next three days.
The move and run out of funds on Bitcoin shows that around 513,000 addresses who bought nearly 382,000 BTC at an average price of $ 53,203 are still suffering losses, aka “no money.” If the leading asset breaks out of this price range and closes above $ 53,200 daily, the majority of these HODLers will step into the safe zone, which could ease selling pressure.
Source: IntoTheBlock
So what’s the problem?
With the price of BTC still around $ 50,000, bullish and bearish sides are equally popular right now. However, the overhead resistances are relatively weaker while the support zone is stronger, paving the way for the asset to rise if BTC bulls can make higher profits.
The net unrealized profit / loss (NUPL) for BTC turned positive on December 20th, suggesting the network is in a net profit position. Usually, the return of the NUPL signal to the green negation zone is an effective indicator of the start of a rally.
Source: Glassnode
That being said, the 365-day market value and the 30-day real value (MVRV) are both below zero, which means that another flash crash of this magnitude is unlikely in the short term.
However, as retailers were wiped out, debt hit a new all-time high. In fact, the large Binance deposits that have emerged could represent a “potential bull trap” even if the larger trend shows accumulation.
Source: CryptoQuant
Additionally, the market size could be tilted in either direction as the futures market is likely to overheat with interest rates open, leverage rates rise, and retail investor sentiment remains neutral.
Looking at the current level of the leverage ratio, a price decline like in June 2021 can be expected, but this can be averted if the price maintains its bullish course for several days until the market enters the new year.