Things Are Heating Up – $100M of Shorts Liquidated, and Here Comes Bitcoin Price Back Above $41K
Is this the end of the "Disbelief" phase preceding a Bullish rally?
It's funny how fast things can go one way or the other in the Bitcoin market. Yesterday, I wrote that Bitcoin was still facing resistance at $38.5K, and that the situation could lead us to a drop to the $30K-$33K area in the short term if this resistance was not broken through quickly.
And then we saw a liquidation of short positions, in the range of $100 million for Bitcoin:
This totally changed the game, and the price of Bitcoin was able to break through this resistance at $38.5K, to touch $40K at first:
Seeing the Bitcoin price break this downtrend line started almost 3 months ago at the November 2021 ATH was a first step, but then it had to be confirmed. That confirmation meant breaking through the $41K upper resistance zone, which I mentioned yesterday:
This has also been confirmed with the price of Bitcoin at around $41.5K at the time of writing. If the market was still in extreme fear yesterday morning, it is likely that it will turn into euphoria quickly at this rate.
Nevertheless, we should not claim victory yet and keep a cool head. We need to wait for confirmation that these $41K will turn into support. A weekly close above $41K is therefore a short-term necessity.
When I saw what happened yesterday, I couldn't help but make the connection with the famous chart illustrating the psychology of a market cycle:
This looks like the “Disbelief” phase. And yesterday, we may have come out of this phase with this breakthrough of the Bitcoin price beyond $41K. Everything will have to be confirmed in the next few days, but we may be past the worst of it now. Those who took advantage of this period to accumulate more BTC will be rewarded as always.
As for the others, they will have regrets. As always too...
Those who continue to fear the start of a tightening cycle by the Fed should remember an interesting fact: during the previous tightening cycle started in 2017 by the Fed, the price of Bitcoin then experienced a run of +450%. There's no telling if that will happen again to the same extent since the price is currently already $41.5K, but it should show you that there's not much to worry about with the Fed's monetary policy inflection in the coming months.
So between now and the end of the weekend, we'll be watching to see if the $41K holds to become a support. Bitcoin can then tackle the next resistance around the $43.5K - $44K area. If this is confirmed in the next few days, then we could have another green February for the Bitcoin price. Something that would confirm the historical trend observed since 2013:
Don't forget the motto I keep telling you: Stay strong, Stay Bitcoin HODLers.
Have a great weekend everyone.
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