2020-10-28 17:31 |
Bitcoin made headlines Tuesday, surging to a new 2020 high of $13,831.
Sentiment indicators show extreme bullishness, and even greed, over Bitcoin’s recent price action. Excessive greed often points to potential downturns in the Bitcoin market. But on-chain metrics suggest that Bitcoin prices could clear $15,000, setting another new 2020 high.
New 2020 high makes investors greedyGreed has overtaken the cryptocurrency market as Bitcoin continues to mark new yearly highs, according to the Crypto Fear and Greed Index.
This fundamental indicator analyses the emotions among market participants from different sources. These include volatility, social media, and trends. The CFGI can peg when crypto enthusiasts are overreacting to price action based on these data sets.
Periods of extreme fear occur during big price slumps, when investors get too worried about further losses. During these times, the CFGI points to buying chances. Conversely, when investors get too greedy — the way they are right now, at Bitcoin’s new 2020 high — it signals that the market is overdue for a correction.
Historically, this fundamental index has been incredibly accurate at anticipating downturns in the cryptocurrency market. For instance, $76 billion were erased from Bitcoin’s total market capitalisation in early September after the CFGI hit “extreme greed” levels in mid-August. The CFGI also hit extreme greed levels in February, and a $160 billion correction soon followed.
Now, a similar event could be about to take place as the CFGI is currently showing high levels of greed among market participants.
Technical analysis: no resistance ahead for BitcoinAfter breaking out of an ascending parallel channel on October 21, Bitcoin entered a consolidation period. Prices were mostly contained between the $12,800 support and the $13,300 resistance level. The dormant price action forced the Bollinger bands to squeeze on BTC’s 4-hour chart, suggesting that volatility was underway.
On Tuesday, a spike in demand enabled Bitcoin to shoot past overhead resistance, validating the Bollinger bands’ outlook as the flagship cryptocurrency hit a new 2020 high. If buy orders continue to pile up, BTC could approach the next psychological barrier, June 2019’s high of nearly $13,900.
While the Crypto Fear and Greed Index indicates that a correction is imminent, IntoTheBlock’s “In/Out of the Money Around Price” (IOMAP) model suggests otherwise. Based on this on-chain metric, Bitcoin faces little to no resistance ahead. The only considerable supply wall lies between $14,425 and $14,830, well above its current price level.
In the graphic below, you can see that about 136,000 addresses purchased nearly 55,000 BTC in the lead-up to Bitcoin’s new 2020 high.
Given the unpredictability of the cryptocurrency market, a bearish outlook can’t be ruled out. Thus, a sudden spike in sell orders could validate the CFGI’s outlook, triggering a market-wide correction.
Under such circumstances, the IOMAP cohorts show that the $13,000 support may keep falling prices at bay. More than 1 million addresses are holding over 820,000 BTC around this price level.
What goes up must come downDespite these positive indicators, the crypto market behaviour can be both volatile and emotional. Investors must pay close attention to the $13,000 support level, because slicing through it would jeopardize the bullish outlook. If this were to happen, BTC could drop to the next crucial area of interest, around $11,700.
On the flip side, as long as the $13,000 support continues to hold, Bitcoin could be well positioned to hit another new 2020 high, topping $15,000.
The post Bitcoin hits new 2020 high, aiming for $15,000 appeared first on Invezz.
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