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Bitcoin (BTC) has been firmly controlled by bulls over the past two weeks, with the cryptocurrency garnering massive momentum after it dipped to lows of $6,800 earlier this month.
Ever since it bounced from these lows, Bitcoin has been caught in a firm uptrend that has allowed it to surge towards the $9,000 region, which each pullback being relatively minor and quickly followed by an extension of its momentum.
Analysts are now noting that it may still be too early to get too charmed by the recent Bitcoin rally, as there are multiple factors that suggest bulls have overextended themselves and that bears will soon take control of the crypto.
Bitcoin Rallies Towards $9,000 as Bulls Catalyze a Massive Rally
At the time of writing, Bitcoin is trading up just under 8% at its current price of $8,700, which marks a notable climb from its daily lows of under $8,100, and an even greater climb from its weekly lows of $7,700 that were set late last week.
After BTC broke above $8,000 last week, multiple analysts had noted that it was imperative for it to hold above $7,700, as this was a key technical support level with historical significance.
Because buyers were able to defend this level and hold BTC above $8,000, it appears that its recent extended bout of sideways trading around $8,100 marked a phase of bullish consolidation.
Despite the overt bullishness of Bitcoin presently, Alex Krüger – a prominent economist who focuses primarily on cryptocurrencies – explained in a tweet from his alt-account that he believes the market’s focus on long positions may signal bulls are overextended at the moment.
“$BTC chart is very strong, funding getting overextended, many alts flying. I’m flat (hedged) since upper 8500s avg. A bit premature. Have orders to short before 8800 with stops before 9000. A tactical short. The market changed, and the focus is mostly on longs,” he explained.
https://twitter.com/classicmacro/status/1217098947652657152?s=21
Key Resistance May Halt the Ongoing BTC Rally
It does appear that Bitcoin’s overnight rally is already showing signs of faltering, as the crypto has retraced slightly after tapping strong resistance around $8,800 – a level that popular analyst Big Chonis believes may lead to a bearish trend reversal.
“$BTC – upper cloud span being tested on the daily #bitcoin chart… note this is where the rejection happened last time,” he said while pointing to the below chart.
$BTC – upper cloud span being tested on the daily #bitcoin chart… note this is where the rejection happened last time… pic.twitter.com/ZoY27hu2GC
— BIG Chonis (@BigChonis) January 14, 2020
If this resistance continues holding strong for the coming hours and days, it may mean significantly further losses are imminent.
Featured image from Shutterstock.
