Why Bitcoin Is Oversold As BTC Retakes Territory North Of $20,000
Bitcoin was able to make some gains during today’s trading session as the market rebounded slightly following an increase in selling pressure. This saw the major cryptocurrencies trade in the red, negatively impacting market sentiment.
At the time of writing, Bitcoin (BTC) is trading at $20,300 with a gain of 1% in the last 24 hours and a loss of 6% in the last week. In the crypto top ten by market capitalization, BTC stands as one of the best performers only outperforming ETH’s price by 4% in the same period.
According to analyst Michaël van de Poppe, when Bitcoin moves back to the $20,000 region, the price may try to break the key resistance at $22,000. If bulls manage to break this wall, the cryptocurrency may try to run towards higher levels.
As shown in the chart below, Bitcoin could climb to the top of a trend formed in June 2022. This would make $29,500 a critical level between the bulls and further gains on the weekly chart. The analyst said while sharing the chart below:
Still a potential scenario on Bitcoin. The trigger is a $19K recovery for me, but we’ll have to see if this holds up. Total market cap reaches the 200-week MA and usually provides support, and then a HL is confirmed.
Bitcoin remains heavily influenced by three factors: the US Federal Reserve (Fed), the strength of the US dollar and the upcoming Ethereum “Merge”. The first of these factors played out against the crypto market, as Fed Chair Jerome Powell hinted at an aggressive approach to combating inflation.
The US dollar contributed to the increase in selling pressure and the crash in the crypto market. The currency has been on a fierce rally since early August, but could have topped out when it rejected from resistance near 110. This could provide some relief for Bitcoin.
The shorts are piling in as Bitcoin lags in performance
Additional data made sure of by a pseudonymous analyst claims that the market’s reaction to the Fed announcements triggered an increase in the number of open short positions. As traders see potential for further upside, these positions may be “short squeezed” as the major cryptocurrencies touch support levels.
If enough shorts are liquidated, the market could see a volatile move to the upside. The analyst believes that crypto is currently oversold, suggesting higher levels. $22,000 and $25,000 will most likely continue to act as critical resistance. The analyst said:
The entire derivatives market is aggressively short right now. Every futures contract and perpetual swap in backward (…). Higher time frame still looks fucked up but short TF to mid TF I think the market is oversold and we probs move a bit higher.
