Uncharted waters raise uncertainty and could deter bulls
Bitcoin price hit the $19,445 figure for the first time in nearly three years on Tuesday, retaining a bullish tone in today’s trading. Earlier in the day, the leading cryptocurrency by market capitalization tried to correct lower but derived support from the 100-hour SMA around $18,600 and bounced back above the $19,000 figure.
The fact that the coin refrained from a deeper retreat despite the overbought conditions may signal its readiness to extend the rally in the longer term as institutional investors continue to join the game, adding to the upbeat outlook for the cryptocurrency market.
Against this backdrop, more and more market players bet on climbing to fresh all-time highs above the $20,000 handle. However, there are several reasons why the digital currency could face a strong hurdle at the $20,000 psychological level.
First, many traders may proceed to massive profit-taking once the price hits this significant barrier. Also, there is no historical data or evidence to suggest that bitcoin would exceed this top as the price had never reached it before. In other words, these are uncharted waters for the market, which in turn raises uncertainty and could deter bulls. Furthermore, the current levels don’t look attractive for buying, and investors could push the prices lower to reenter the bull run at lower levels.
Still, these reasons don’t affect the upbeat long-term outlook for the dominating cryptocurrency that is expected to rise further after a possible downside correction that looks appropriate at this stage. If BTCUSD struggles to overcome the $19,500 intermediate resistance, the pair could get back below $19,000. In this scenario, the next support zone should be expected at $18,400, followed by $18,000. Longer-term support is represented by the ascending 20-DMA that arrives marginally below the $17,000 figure. As long as the prices stay above this moving average, downside risks are limited.