on the crypto
Less than a week ago, the price of bitcoin set a new all-time high at $ 19.920,53. And still, the world's oldest cryptocurrency is still struggling to break through the $ 20.000 level.
The reason Bitcoin fails to break through this limit, according to analysts and traders, is simple: there are too many sell orders near the $ 20.000 level because many bitcoin holders are afraid of short-term selling.
Similarities with 2017 are holding back investors
The $ 20.000 price threshold is particularly significant because it is roughly the level at which the market stopped during the rally at the end of 2017 that saw the price of bitcoin quadruple within two months, and then drop by 70% by the end of XNUMX. two months later, his biggest (currently) price correction - here the quotation in real time.
"A huge number of sellers are placing orders around the $ 20.000 level, and that has undoubtedly created a strong level of resistance," said Simon Chen, executive director of investment and trading at Babel Finance, the lender. based in Hong Kong.
Many associate current events with what happened during 2017's bull market. For some, the similarities to 2017 are hard to ignore, particularly how quickly bitcoin hit new record prices.
The $ 20.000 psychological block
The $ 20.000 level "is like psychological warfare for many," said Lingxiao Yang, chief operating officer at cryptocurrency firm Trade Terminal. "It only took about a month for bitcoin to rise from around $ 14.000 to a new all-time high."
But Yang also said that this emotional element has been largely reflected on the retail investor side, as more institutions are in the "buy the dip" mentality. Market fundamentals are also weighing on bitcoin.
Data from the crypto industry analysis site CryptoQuant indicates that addresses holding large amounts of bitcoin, or whales, have not withdrawn bitcoin from exchanges. "The fact that the whales do not withdraw their cryptocurrencies means that BTC remains available for sale," Ki Young Jun, CEO of CryptoQuant, said in a tweet. "If the whales think the price will rise, they will take a lot of BTC."
Another proof of Bitcoin's selling pressure
According to Denis Vinokourov, head of research at Bequant, further evidence of the increase in selling pressure around the $ 20.000 mark is that an increasing number of “wrapped” bitcoins have been “unwrapped” by decentralized finance (DeFi).
When Ethereum-based DeFi was on the crest of the wave last summer, bitcoins were tokenized (or “wrapped”) on Ethereum. At one point there were more Ethereum-wrapped bitcoins in circulation than miners mined bitcoins. To some extent, this may have been simply because bitcoin's price was doing quite well over the summer, more than doubling from the March 17 low of $ 3.867,09.
