Bitcoin (BTC) price surpassed $ 24,000 on December 19, always reaching a new peak. On Coinbase, BTC reached a peak of $ 24,200 and has since consolidated into the $ 23,500 to $ 23,800 range.
Three factors pushed up the price of BTC within a short period, leading to a record high. The factors are a large short squeeze, sales orders stacked at $ 23,600, and the market’s response to the US Treasury’s self-custodian wallet rule offering.
A huge short squeeze is happening again at $ 23,600
According to data from Bybt.com, $ 138 million worth of short contracts were canceled today.
The short liquidation of short contracts happened just as Bitcoin surpassed $ 23,600. The $ 23,600 area was a key level of resistance because of sales orders stacked across large exchanges.
On Bitfinex, the $ 23,600 and $ 23,800 resistance levels had large sales orders before the rally took place. As the price of Bitcoin began to rise, shorts and sellers in the resistance range squeezed $ 23,600 to $ 23,800.
Typically, a short squeeze occurs when a seller is forced to market its position because of the rising price of Bitcoin. This causes the buyer demand to swell within a short time, often leading to a large upside down cut.
The market is not covered by the US FinCEN rule
On December 19, U.S. Treasury Secretary Steven Mnuchin unveiled a rule proposal concerning self-custodian wallets.
The rule requires exchanges to keep track of withdrawals and deposits above $ 3,000 that originated from non-custody wallets. If the transactions exceed $ 10,000, then exchanges would have to report directly to the Financial Crime Enforcement Network (FinCEN).
However, as analysts explained, the rule itself is not as bad as industry executives initially thought. Cointelegraph reported that unless the proposal becomes law, the price of Bitcoin and the broader crypto market would likely ignore the news.
Jake Chervinsky, general counsel at Compound Finance, He said:
“Let’s look at the bright side for a minute. This does not require KYC for all transactions with a non-custodial wallet. It is not a complete ban on self-custody. It does not prohibit the unauthorized use of a network. It could have been much worse – REALLY. ”
Still, despite the positive catalysts, in the near term, traders believe that Bitcoin may consolidate or withdraw, due to the overestimation of the rally.
Scott Melker, a cryptocurrency trader, cited the Bitcoin Relative Strength Index (RSI) on the 4-hour chart to suggest that over-thinking bear diversions are likely to occur. He He said:
“Closed my long leverage $ BTC. Overbought bear divs are likely, not guaranteed. But I’d love to come back long if I had the chance. Especially re-testing the old is always high as support. ”