Bitcoin’s rally towards $20,000 from around $14,000 has been quite a simple one with very little barriers or resistance levels along the way. The coin has managed to smash $1,000 brackets with ease as it now looks to challenge $19,000.
The big barrier on the horizon is the previous high of $20,000 which was breached in 2017. However, before that level is reached many analysts are wondering if there will be a correction before then or if the coin can continue growing up and beyond the last all time high.
There are metrics that sem to sugges that a pull back is quite likely, however, when it comes is less certain. Will it before Bitcoin breaks its all time high or will the coin correct aftwards?
Several on-chain data points, namely the Spent Output Profit Ratio (SOPR) indicator, stablecoin inflows, stacked sell orders at $19,000, and the Crypto and Fear Index are all pointing to a likely correction.
Profit taking
The SOPR indicator essentially gauges how profitable Bitcoin holders are at the moment. When the SOPR is high, BTC is at risk of a profit-taking pullback since traders tend to sell when they are in profit.
In the past several days, the SOPR indicator has reached a level that previously led the price of Bitcoin to correct such as in late 2018 and summer 2019.
Rafael Schultz-Kraft, the chief technical officer at Glassnode, said:
“Adjusted SOPR (hourly, 7d MA) as high as it hasn’t been since July 2019. Correction incoming?”
Renato Shirakashi, the creator of the SOPR indicator, said: “People, in general, are much more comfortable selling when they are in profit. In a bull market, when SOPR falls below 1, people would sell at a loss, and thus be reluctant to do so. This pushes the supply down significantly, which in turn puts an upward pressure on the price, which increases.”
$19,000 Resistance
Exchange order books also show that the $19,000 level has become an important resistance area. There are significant sell orders across Bitfinex, Bitstamp, Binance, and Coinbase near $19,000, which might prevent the continuation of a rally.
Another possible factor that could trigger a short-term pullback is the Crypto Fear and Greed index. The index is still at dangerously high levels, which raises the probability of a correction.
