Bitcoin has been trading primarily around the $ 50,000 mark for the past 5 days as the larger market trend is largely bullish and the New Year approaches. After 3 rallies on the short-term chart, BTC’s trajectory has finally made a higher high, with the price safely above the $ 50,000 mark.
However, given the low level of retail euphoria and overheated futures markets, is recent development really a bull run or just a bull trap before the end of the year?
Bitcoin holds over CZK 50,000
The price appears to have capped from $ 45,000 to $ 51,000 in the last 4 days following the recent rally. On December 24th, BTC retested its 21-week moving average (WMA) after rebounding from the 50 WMA on December 21st.
Resistance above $ 53,350 will be the first hurdle for BTC to break through the 21st WMA, but to keep the rally going, the price needs to hit a higher high or low in the next 3 days.
Bitcoin’s in and out of money indicator shows that around 513,000 addresses that bought nearly 382,000 BTC at an average price of $ 53,203 are still at a loss. If the top crypto breaks out of this range and closes above $ 53,200 the day, the majority of HODLers will step into the safe zone, reducing selling pressure.
What is the problem?
With Bitcoin still trading around the $ 50,000 mark, both bulls and bears are “on par with” at the time of writing. However, overhead resistance levels are relatively weaker while the support zone is stronger, paving the way for price rise if the bulls go for more.
The net unrealized profit / loss (NUPL) turned positive on December 20th, suggesting the network is in a net profit position. Usually, the recovery of the NUPL signal into the green zone of denial of trust is an effective indicator of the start of a rally.
In addition, the 30-day and 365-day market-to-true (MVRV) values are both below zero, which means that the likelihood of a flash crash of this magnitude is low in the short term.
However, with retailers wiped out, leverage has hit a new all-time high. In fact, large deposits at Binance could be a potential bull trap even if the bigger trend shows accumulation.
Additionally, with the futures market looking overheated with open interest, debt mounting, and retail investor sentiment remaining neutral, the size of the market could tip either way.
Looking at the current state of the leverage ratio, it is likely that the price will collapse as it did in June 2021. However, there is still a chance to stop if BTC maintains an upward trend for the next few days at the start of the new year.