The cryptocurrency market remains optimistic, but analyses suggest a correction is due for Bitcoin, which revisited the $44,000 level on December 21. At the time of writing, Bitcoin traded at $44,071, raising questions about its future movements.
Data from TradingView confirms Bitcoin trading above the previous week’s levels, with a breakout leading to a peak of $44,300. Despite a weekly increase of over 6%, some market participants remain cautious. Stockmoney Lizards shared via Twitter that while a correction seems necessary, Bitcoin’s chart looks strong across all time frames, forming an ascending triangle at the $44,000 resistance level.
Other analysts, including Stockmoney Lizards, are focusing on the decision regarding the United States’ first Bitcoin spot price exchange-traded fund (ETF), expected by January 10. They suggest that Bitcoin is likely to continue its ascent and break the upper trend line until the ETF decision is announced.
However, they warn that the announcement could still lead to a “buy the rumor, sell the news” event. QCP Capital, in its market update on December 21, expressed concerns that the actual demand for Bitcoin Spot ETF applications might fall short of market expectations, potentially setting up a classic sell-off scenario in the second week of January. They anticipate a possible pullback to the $36,000 level before a resumption of the uptrend, with resistance between $45,000 and $48,500.
Stockmoney Lizards also warns that a drop below $40,000 could liquidate some futures long positions, potentially leading to a retreat towards $38,000. They point out that a rally in need of correction, year-end sales, and reduced trading activity due to the holiday season could favor this scenario.
While such a scenario is deemed less likely, market data shows investors are poorly positioned for the recent move above $44,000. According to CoinGlass, over $100 million in crypto short positions were liquidated on December 20, marking the highest amount in two weeks. Bitcoin-specific short liquidations accounted for $38.5 million of this total.