The Bitcoin price has seen a relatively large pullback since December 27, after it hit a peak at $28,422. Following a 6.5% drop, technical analysts and traders are becoming slightly cautious in the short-term.
“Distortion has been consistently pretty high. And derivs sentiment has been in overdrive past couple of days. If we close this daily with a shooting star, then maybe this was the local top.”
Based on market data, the trader also emphasized that one more “squeeze” is likely, which means another spike upwards is a possibility.Scott Melker, a cryptocurrency trader, also noted that a drop to $20,000 would surprise many, even though it is a major support area. He wrote:
“A drop to 20k to retest the former all time high as support would terrify many, when that price was a dream two weeks ago.”
There is one variableAccording to Alex Saunders, a crypto investor, data show that retail investors are buying again. Although data from PayPal and itBit primarily show growing buyer demand for Ethereum, it shows that the retail appetite for crypto assets is rising. Saunders stated:
“Retail is buying again. $50M daily on PayPal via itBit & interestingly, of that ETH has gone from 10-20% to 27%. ETH/BTC looks to have bottomed on the weekly chart. BTC needs a rest. 2021 will be the year smart money finally comprehends Ethereum.”
Throughout 2020, analysts have attributed Bitcoin’s rally to institutional investors. If retail investors re-enter the market, it could fuel the market to see a renewed uptrend.