The Bitcoin price is moving towards USD 14,000, but traders expect the USD 13,875 resistance to be a critical level in the short term.
The Bitcoin price (BTC) has surpassed USD 13,745 and is now on its way to the next major resistance level. Traders have hinted that the USD 13,875 is the next key short term area for BTC for two reasons.
First, Bitcoin peaked at USD 13,970 on June 26, 2019. Technically, the previous high reached over a year ago still acts as an important area for traders.
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Secondly, technical analysts say that Bitcoin’s weekly candlestick chart indicates that USD 13,875 is the next „logical resistance“.
The most important factor will be how Bitcoin’s price responds after reaching the long-awaited resistance level, and it’s possible that it will improve its short-term performance until the end of this year.
Should investors expect a big drop near the $14,000 level?
Over the past few days, predictions of a large Bitcoin retracement have been increasing as market sentiment becomes more euphoric.
Historically, even in the midst of large upward cycles, Bitcoin experienced healthy corrections that further strengthened its upward trend.
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Edward Morra, a well-known cryptomoney trader, said he expects a market reaction of USD 13,875. The last time BTC reached that level 16 months ago, it saw the price plummet in a short period.
Weekly chart of the BTC/USD pair Source: TradingView.com, Edward Morra
This time, traders do not expect such a sharp drop, but they do expect a strong reaction from BTC and the market in general. Morra said:
„On the longest time frame chart, this weekly level ~ $13,875 is the next logical resistance. He rejected the 2019 rally strongly, the second test will be less violent, but I think there will be a reaction. Getting that ’19 high in the weekly supply is something to look out for.
Last week, Bitcoin tested many key resistance levels in a short period of time. However, it easily surpassed those levels, consolidating above each one and demonstrating a steady climb.
This is the last big hurdle before Bitcoin’s price reaches $20,000.
For buyers, the ideal scenario for Bitcoin would be to exceed the $13,875 level and remain stable above it. Such a pattern would indicate a healthy recovery from a multi-year resistance level, which is very optimistic.
Additional Factors Behind the Bitcoin Boost
There are two fundamental, macro factors that could catalyze Bitcoin’s momentum in the short term: decoupling from the U.S. stock market and inactive supply.
As Bitcoin investor James O’Beirne pointed out, BTC decoupled itself convincingly from the U.S. stock market in October.
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Due to the lack of a stimulus package, the uncertainty surrounding the 2020 election and the large increase in COVID-19 cases, the U.S. stock market has been steadily falling. At the same time, Bitcoin has recovered strongly and sentiment around the leading digital asset has improved significantly.
Bitcoin’s inactive supply. Source: CoinMetrics.io
According to CoinMetrics, the inactive Bitcoin feed, which has been maintained for at least 1 year, reached a new all-time high. The researchers said:
„The% of the BTC supply maintained for at least 1 year has never been so high. This is bullish for BTC, especially considering that this metric historically peaked during periods when the price was at local lows“.
These 3 key indicators indicated that the price of Bitcoin peaked at $12,000
The confluence of positive fundamentals, macro and technical factors, along with an optimistic longer-term technical framework structure, increases the probability that Bitcoin will reach USD 13,875 without experiencing a massive correction.