On Monday, Bitcoin underwent a notable breakout. The asset surged from the $11,800 baseline it was trading at to a daily high just shy of $12,500 in the span of hours. The move brought BTC above the pivotal $12,000 region, which acted as resistance at the highs of three separate rallies over the past two weeks.
Bitcoin is reversing lower, though, as bears have initiated a strong sell-off. Over the past hour, the asset has plunged from $12,240 to a local low of $11,920. BTC now trades at $12,040 as of this article’s writing, with buyers stepping in to hold the line at $12,000.
Chart of BTC's recent price action from TradingView.com
The plunge lower liquidated $23 million worth of BitMEX long positions. This is actually important to the bull case as the funding rate of futures exchanges, which basically tracks how overextended longs or shorts are, is currently in the positive. A neutral funding rate is likely to be seen before Bitcoin moves higher once again, as that signals neither side of the market is overleveraged.
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What’s Next for Bitcoin?
Bitcoin’s correction was seemingly triggered by a similar move lower in the value of gold and equities, which plunged at the same time as the leading cryptocurrency. Although the magnitude of these asset’s individual moves was different, the directionality and timing were similar. This suggests that maybe on a short-term time frame, Bitcoin will follow the trajectory of gold and the stock market.
On a longer-term basis, though, many analysts remain optimistic.
One trader predicted the ongoing correction a number of hours ago. According to his analysis at the time, Bitcoin wicking into the grey zone he depicted would “present an opportunity” to open a long position to target $14,000.
Like other analysts, this trader thinks that Bitcoin breaking above $12,000 gives it fuel to move towards the next important resistance near $14,000.
Chart of BTC's price action over the past few weeks with analysis by "TraderRB" (@Cryptomeowmeow on Twitter). Chart from TradingView.com
This optimism was echoed by a number of other market participants, who say that a move towards $13,000 remains highly likely.
Featured Image from Shutterstock Price tags: xbtusd, btcusd, btcusdt Charts from TradingView.com Bitcoin Plunges Under $12,000 After Breakout: Here's What Could Come Next