It would seem that traders in the spot and futures markets wouldn’t let this rally die out before reaching a new record high in Bitcoin. During the Thanksgiving holiday, Bitcoin sold off on the spot exchanges while futures traders could do nothing until the following day when the markets re-opened. They followed suit on Friday closing over $2,000 lower while the spot markets closed relatively unchanged from the lows already hit on Thursday. Then spot Bitcoin (Bitstamp on our first chart) made one of the strongest three days recoveries culminating with a new all-time high on Monday in both spot and futures.
After hitting that coveted area and final resistance level of $20,000 guess what happened? BTC found resistance! I know it is anti-climactic to say that Bitcoin won’t hit $30,000 by the end of the year but I don’t think it is going to happen, and that’s okay. For me and a lot of other traders what will truly make this rally a special one to be remembered forever is if Bitcoin can hold onto this price point. Over the weekend we got a taste of the volatility that used to be so prevalent in this market and what we had gone without for some time leading up to this parabolic launch from $12,500 up to $20,000.
Last week’s CFTC report shows that while institutions and large hedge funds are long three to one, non-commercial positions being the majority were more bearish with 10,737 shorts to 8,285 longs. Unreportable or small individual traders are overwhelmingly bullish, but total short positions still outnumber long ones.
To me what would be the most bullish thing for BTC to do now is not further gains but consolidation. On our second chart, we show volume in a few different metrics. On this sixty-minute candlestick chart of Monday’s CME Bitcoin futures continuous contract, you can see below in green and red hourly bars representing the volume for each hourly candle above. Volume did spike during the hours where prices rose the most. Contrary to that if you look at the horizontal bars on the chart itself the length of the blue lines tells us that buyers were most eagerly buying at points of consolidation. This shows hesitation amongst traders as the price goes into never before seen territory. This is another reason why Bitcoin may stay around this price zone for awhile with the rest of the year likely to see sideways to downward action if these clues are correct.