Bitcoin rally over the past few months has been historic. The bulls took control of the coin’s price action, sending it from sub-$10K lows in late summer to set a new price record above $28K just a few days ago.
Since hitting a new all-time high, the cryptocurrency’s uptrend has stalled, with the BTCUSD pair experiencing a consolidation phase. Meanwhile, altcoins such as Polkadot and Cardano have begun gaining momentum once again, while XRP tumbles even further pending the SEC lawsuit against Ripple.
BTC formed a base above the $26.5K support level in today’s sessions and climbed above $27K. The benchmark crypto remained well bid above the $26,800 and surged higher, breaking above $27,200.
The digital coin faced some intense resistance at this level, resulting in a retracement toward the $26.5K support base. As of this article’s writing, Bitcoin is down just over 2% at its price of $26,631.
BTCUSD Chart By TradingView
Hedge Funds are Betting on a BTC Price Pullback
Many institutions, retail investors, and professional traders still have a long-bias for BTC despite the current volatile price action. The recent holiday rally has convinced most investors that the BTC market could be well-positioned to see a continuation in the mid-term.
However, some hedge funds hold the view that the world’s largest cryptocurrency will likely post a sizable correction in the near-term. As per the latest Commitment of Traders (COT) report from the CME, hedge funds are banking on the possibility of a large decline that clears out over-leveraged long positions.
The report shows that this body of investors on the CME has more short exposure to BTC than ever before, indicating that investors are hedging their spot holdings in anticipation of a large downside movement.
Despite the anticipation of a big pullback from some investors, it remains unclear where the BTC price trends next. Until the king coin enters the phase of its bull market where it truly goes parabolic, there is a high likelihood that it will continue seeing large declines that reset its funding/premiums.
Ethereum Fails to Test the $750 Mark
The ETH price spiked above $740, but it failed to test the $750 mark before it started a downside correction.
Many investors were optimistic that the altcoin would cross this psychological barrier after it traded to a new yearly high at $746. There was, however, a strong decline in XRP that dragged down both BTC and ETH. The ETHUSD pair is currently trading close to the $720 support at its price of $724.
ETHUSD Chart By TradingView