Speculators have piled into fresh long positions, open interest and funding rates have spiked, and the path looks clear to test the overhead resistance around $45,500 next.
While a minor pullback may hit in the short run to liquidate the most aggressive longs, make no mistake - Bitcoin looks ready to flex its muscles again.
TLDR
- BTC broke above the key $38k resistance level and looks poised to test $45.5k next.
- Bullish momentum is very strong with high open interest, funding rates and new longs.
- Some short-term pullback is possible to shake out overleveraged longs.
- Overall, it has an extremely positive outlook for BTC in the medium and long term.
Disclaimer: Not financial or investment advice. You are responsible for any capital-related decisions you make, and only you are accountable for the results. “One Glance” by Cryptonary sometimes uses the RR trading tool to help you quickly understand our analysis. They are not signals, and they are not financial advice.
Macro analysis
- This week’s key economic data is labour market data, with JOLTs out tomorrow and Non-Farm Payrolls and the Unemployment Rate out on Friday.
- The S&P and Nasdaq are due to open lower, whilst the DXY has opened higher - as we’ve been expecting at the back end of last week.
Technical analysis
- BTC could pull back to $38,300, find that area as new support and bounce higher from there.
- The local support to the downside is at $39,500.
- The resistance to the upside is $45,500, which we expect price to hit in the coming month, even if BTC does have a small pullback in the short term.
- The RSI is now overbought on most timeframes, with the 3D and Weekly both at concerning levels. The bullish momentum may be enough for the price to continue higher, but we expect we’ll need to see these indicators reset at some point in the coming months.
Market mechanics
- The Open Interest has spiked from $16.0b a few days ago to $18.5b.
- The OI-Weighted Funding Rate has also ramped up in the last 24 hours to 0.0425%, although it has come down in the last few hours to 0.0340%. However, this is still a high level of Funding.
- The Long/Short Ratio is at 1.098, which indicates that in the last 24 hours, more participants have piled into Longs rather than Shorts.
Cryptonary’s take
The bullish momentum in the market is currently very strong, with ETFs likely to be approved in early January and then halving in April. This has enabled price to break out of the $38k resistance with the mechanics at a relatively clean spot.However, we’re now seeing higher Open Interest and the Funding Rate spike. The most recent Longs have also been retail-dominant. This is usually not a good recipe for further upside. We, therefore, think the excess leverage that has piled in in the last 12 hours will need to be shaken out before the price can go higher. This may mean a slight correction for BTC, maybe just to $39,500 - to $40,000. But we’d expect this to reduce the Open Interest, reset Funding, and then price will be back to a healthier setup to move higher again.
If the price moves down to $38,000, we will be light DCA buyers of BTC for the long term at that price. 12 to 18 months time horizon view.
Overall, very positive for Bitcoin. Yes, we may get some small downside in the very short term, but we expect price action to continue to be positive until the ETF approvals (likely). Big dips are for buying.
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