• Bitcoin lost steam the previous day and seems poised to re-test its support levels in the coming days.
• The cryptocurrency rallied on the back of favorable macroeconomic winds and high upside liquidity from overleveraged short traders.
• Bitcoin trades at $20,800 with a 3% loss in the last 24 hours, and is the best performer in the top 10.
The cryptocurrency market has been on a tear in recent weeks and Bitcoin has been at the forefront of this rally. After rising over 16% in the past seven days, Bitcoin has suddenly hit a roadblock and has lost 3% of its value in the last 24 hours. This sudden downtrend has left many traders and investors speculating that Bitcoin could be on the brink of re-testing its support levels in the coming days.
The rally which Bitcoin has been experiencing of late has largely been attributed to favorable macroeconomic winds and high upside liquidity from overleveraged short traders. This influx of capital has allowed Bitcoin to surge to a new all-time-high of $20,800, making it the best performing asset in the top 10.
Unfortunately, these gains may not be sustainable. According to a report from QCP Capital, the macroeconomic winds could be shifting and this could have a negative impact on the cryptocurrency market. This shift could cause Bitcoin to drop back down to key support levels around $19,600-$19,700; levels which coincide with the 200 day simple moving average and 50x leverage longs.
In addition, newsBTC reported that short positions have been piling up as Bitcoin trended to the upside. As the market has trended upwards, these positions have been liquidated, allowing BTC to continue climbing. However, it is possible that over-confident long positions could become the target, pushing Bitcoin back to these critical supports.
It remains to be seen what will happen to Bitcoin in the short-term, but it is clear that the cryptocurrency is in a precarious position. The market will be watching closely to see if Bitcoin can hold its current gains or if it will be forced to return to its previous support levels.