Bitcoin price (BTC) briefly surged above $ 19,500 on December 15, reaching as high as $ 19,570 on Binance. However, BTC then fell to $ 19,050 in three hours and saw a sudden drop of 2.5%.
Bitcoin rose to around $ 19,600 due to the relief rally and negative funding rates for the futures market. But it rejected the levels from which it had collapsed since November due to selling pressure from whales.
A relief rally for Bitcoin was expected
As Cointelegraph reported on Dec. 12, technical indicators showed that BTC was oversold after falling below $ 17,600.
The four hour candlestick chart showed a bullish divergence and a TD9 buy indicator, indicating that selling pressures were exhausted.
Bitcoin’s price quickly rebounded above $ 18,000 and continued its run above $ 18,300. BTC, which then broke the whale cluster’s resistance level at $ 18,800, continued to add momentum.
Carried by the relief rally, Bitcoin continued to surge, eventually climbing as high as $ 19,570 on major exchanges.
Negative futures funding rates have fueled BTC
Futures funding rates for Binance Futures and other major platforms turned negative as Bitcoin began to rebound above $ 18,000.
Bitcoin futures contract funding rate becomes negative when there are more short sellers than buyers. This means the likelihood of a brief press increases, which can lead to a sudden surge in demand from buyers.
Although the funding rate was negative for a short time, as Bitcoin’s funding rate rarely turns negative, this indicated an aggressive sale.
A pseudonymous trader named “Byzantine General” pointed out that short sellers were very aggressive throughout the relief effort. A move over $ 19,300 would squeeze a lot of shorts, he added, saying:
“Shorts were very aggressive again and they are now underwater. Breakthrough 19300 and they get bruised hard.”
Once Bitcoin topped $ 19,300, it quickly hit $ 19,570, suggesting that a large short squeeze was occurring.
In exchange, Bitcoin whales are returning
Despite the strong rebound, Bitcoin saw a big sell-off above $ 19,500 as whales took profits.
Ki Young Ju, the CEO of CryptoQuant, said on Dec. 15 that he is reducing his position due to the increase in whale populations on exchanges. He said:
“Realized profit of USD 19,250 and change from generation long (10x) to normal long (1x). If one considers the mean value of the exchange rate inflow (MA with 144 blocks), $ BTC whales deposit on exchanges. I think whales need more time to make a profit here. ”
Don’t buy the damn dip
Too many $ BTC whales on exchanges
– Ki Young Ju @ (@ki_young_ju) December 15, 2020
Since then, Bitcoin has fallen back below $ 19,100 and again consolidated below the resistance area of $ 19,400.
In the near future, the key for Bitcoin is to stay above the $ 18,800 support level. As Cointelegraph reported, this hold would be a bullish sign that could cause BTC to hit new highs again.