When the price of Bitcoin hits a new ATH on most cryptocurrency exchanges, traders expect its price to quickly reach $20,000. However, despite the market value exceeding US$354 billion and becoming the seventh largest currency in the world, crypto assets seem to be facing a series of adjustments. For many people, the $20,000 level seems to be temporarily unattainable because it is also often seen as a psychological milestone.
The psychological price breakthrough is of great significance, especially for most retail traders, this level is the closest to its previous ATH level. In order for the price of Bitcoin to break through $20,000, analysts on the chain believe that the active supply must always be kept at a low level, or preferably reduced to a low level. In addition, market demand should also increase. However, demand is mainly driven by institutions such as Grayscale, and most HODLers (2 to 3 years) are on sale.
In order to make this view of liquidity a reality, we consider the distribution map of Bitcoin that used HODLer. Bitcoins purchased in the price range between $5428 and $11,000 are rapidly flowing into exchanges. The percentage of active supply in the past year was low. However, traders and HODLers in 2017 and before were all selling. Due to concerns about the difficulty of adjustment, they retained unrealized profits.
This is counterintuitive, because a large amount of FUD (fear and suspicion) may cause prices to fall , and it may be more challenging to integrate beyond $20,000 or stay below that level.
Not reaching the $20,000 level may also lead to an intuitive correction. On derivatives exchanges, BTC options trading volume has been declining since November 30, while OI has fallen by 15.6%. It is obvious from the Skew chart that the rapid loss of interest indicates that it may be more challenging for the spot exchange price to reach $20,000.
The cumulative volume of sell orders on the spot exchange is $20,000, indicating that this is the magnitude that retail traders expect price increases. Although the total value of MicroStrategy’s Bitcoin is $60 million and the average price is higher than $19,000, retail traders expect a correction in the short term and are preparing for it. In this case, reaching $20,000 may be long or even difficult to break through, and short-term selling pressure may lead to massive selling by retail traders.
Below US$20,000, the important price level is US$19,000, which is the level where the asset has been above US$19,000 for the past week. Although the market value remains strong, given the increase in supply, the only way to reach $20,000 will be more than negative sentiment and concerns about correction.
Source: Blockchain Knight