The price of Bitcoin (BTC) broke through a new all-time high crossing $64k on Wednesday on Binance. The emotions are literally running high as market sentiment around Bitcoin and Ether (ETH) remains overwhelmingly bullish, but the short-term sentiment remains somewhat mixed. Experts are cautiously observing and even calling it a “price discovery” (when the price of an asset reaches a new all-time high) event.
Well! It was on Tuesday, that the price of Bitcoin technically entered price discovery, overtaking its previous record highs as it made its way above $62k. Now, whenever an asset gets into price discovery mode, two scenarios could emerge: It becomes overbought and sees a drastic downfall correction, or it sees picking up even more speed and rallies further.
While the momentum of Bitcoin is evidently strong, traders are mixed in the near-term trends of BTC. The four-hour price chart of BTC has started to enter into overbought territory, striking notes of caution.
Atop the technical indicators show that Bitcoin could be overbought in the short term, while the futures market also remains extremely overcrowded as the three-month premium on BTC futures contracts is reaching 50%.
Premiums in the futures market indicate whether the derivatives market is overheated with buyers. If the premiums are high, the risk of a severe sell-off as a result of investors taking profit increases.
Now, there is a chance that Bitcoin is in the final stages of its uptrend. However, this bliss could last may be 2-3 weeks or even more. Price could reach 200k or even more, it’s hard to say at this critical juncture. It would not be prudent or in good judgement to make “balsy moves” or take emotion driven decisions right now based on just this upswing.
However, then there is also a strong possibility that Bitcoin does not tap out like it did in 2017. Rather, it could range and consolidate for a long time after it peaks, quite similar to gold in its early days.
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