Bitcoin bounced around $23,000 on December 22 as anticipation built over fresh institutional buy-ins.
Trader eyes $18,500 liquidation dip
After Monday was characterized by weakness with a retracement to $21,800, Bitcoin staged a modest recovery on Tuesday, at press time seeking to reinforce $23,000 support once again after highs of $23,400.
In the short term, however, some are concerned that a deeper correction will occur, with popular trader Michaël van de Poppe nonetheless describing such a move as “healthy” given the speed of recent gains.
“People are focused on $19,500 for now, and I think this is a very critical level to watch, but I would not be surprised if we dip below $19,500 towards $18,500 to liquidate all the people that have taken longs at that range,” he said in a fresh YouTube update.
The prognosis is one that Van de Poppe has reiterated in recent days but which jars with optimistic predictions from other sources weighing the imminent entry of fresh buyers.
Glassnode analyst: BTC “supply and liquidity crisis”
Among them is Rafael Schultze-Kraft, CTO of on-chain analytics resource Glassnode, who on Monday detailed no fewer than ten indicators flashing bullish for Bitcoin under current circumstances.
“#Bitcoin is in a supply and liquidity crisis. This is extremely bullish! And highly underrated,” he told Twitter followers.
“I believe we will see this significantly reflected in Bitcoin’s price in the upcoming months.”
Schultze-Kraft pointed to a combination of hodler behavior and institutional interaction as supporting bulls going forward. In particular, public purchases worth billions of dollars by major players are likely only the tip of the iceberg, he argued.
“Do you really think they’re alone? Of course not. Expect many more on the move. They’re coming – gradually, then suddenly,” he continued.
As Modern Consensus reported, the more buyers enter, the more Bitcoin is likely to face a scenario in which miners simply cannot produce enough “new” BTC to meet even institutional demand.
In terms of liquidity, meanwhile, data showing coins leaving exchanges for cold storage — taking them out of circulation — implies that it will become increasingly harder to procure large amounts of Bitcoin in venues such as exchanges.
Capping the bullish narrative meanwhile was a decision to pass a $900 billion coronavirus stimulus bill in the US, piling on even more debt at the Federal Reserve.
“Another $900 billion dollar advertisement for Bitcoin,” Gemini exchange co-founder Tyler Winklevoss mused as the news was announced.
The bill includes new direct payments of $600 to eligible Americans, and in a sign of the times changing, Forbes even ran a piece suggesting that they use the money to buy Bitcoin instead.
Those who converted their $1,200 stimulus check to BTC in April were sitting on $4,285 as of December 20, returns of 257%. As noted by a dedicated Twitter account, $1,200 equalled around 18 million satoshis at the time the checks were issued, whereas now, $600 buys just 2.5 million satoshis.