Bitcoin Is Getting Set To Retest $18.4k Resistance

In less than 24-hours, bitcoin was able to slice through $17.3k and land among $18.4k. It was then met by a big wall of sell orders but not to fear, bitcoin is ramping up once again to retest its new resistance. Bitcoin’s 24-hour range is $17.5k-$18.5k.

Volume

The spot market is heating up as volumes on major exchanges are much higher than normal. On Wednesday (11/18), USD/BTC volume was over $1.6 billion, surpassing this month’s high made on November 5th.

Spot BTC/USD volumes the past month. Source: Shuai Hao/CoinDesk Research

This would have made much sense to the people locked out of their funds as Coinbase was down due to the amount of traffic.

Futures

Fixed-month futures contracts usually trade at a slight premium, indicating that sellers request more money to withhold settlement longer. On healthy markets, futures should trade at a 5% or more annualized premium, otherwise known as contango. Let’s look at the 3-month annualized basis for July 2019, last rally, to today’s rally.

Bitcoin 3-month futures annualized basis, July 2019. Source: Skew

Some excessive optimism took place as the basis indicator touched 20% on June 23. This showed an unwillingness to reduce long positions, despite a 30% correction from the top. Now let’s compare to where we are today. Pay attention to the difference in volatility.

Bitcoin 3-month futures annualized basis, November 2020. Source: Skew

We see that the basis indicator is falling below 10% right after the $18.4k top formation. To further differentiate the current price action from July 2019, two weeks ahead of the price peak the futures premium stood at 0%, a clear indication that investors were feeling bearish. Today, the lowest level over the past couple of weeks has been 7%. This means investors have kept positive expectations over the past couple of months. In July, the market faced an intense and quick optimistic rush.

So far we’re on track to further growth but what’s the worst case scenario? Let’s hope we stay above the 20-day moving average, if not then a correction must be made. Since the relative strength index (RSI) has been between 70 and 84, we may fall as low as $12,500. It’s important to have your greed in check in these euphoric times.

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Cryptocurrency Research

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