Bitcoin made headlines after rising to a new yearly high of $18,500 on Wednesday, November 18th. As market participants appear to be entering a state of FOMO, on-chain data reveals that there is more room to go up before a correction materialises.
The crowd goes wild as Bitcoin surges to new yearly highs
Bitcoin captured the market’s attention following the impressive bull run it has seen over the past few weeks. The flagship cryptocurrency has risen more than 40% since November 3rd while buying pressure continues to build up behind it. The steady upward price action has not gone unnoticed.
Are you looking for fast-news, hot-tips and market analysis?
Sign-up for the Invezz newsletter, today.
The number of BTC-related mentions on different social media networks went through the roof as prices breached the $18,000 mark.
LunarCRUSH registered a massive spike in the social engagement activity around Bitcoin. Nearly 1.16 million engagements were recorded over the past 24 hours, representing a 315% increase in the last four days.
More importantly, approximately 68% of all the social interactions have been bullish about the pioneer cryptocurrency. These include favorites, likes, comments, replies, retweets, quotes, and shares, to name a few.
The rising chatter around Bitcoin is a concerning sign from a counter sentiment perspective. Usually, when retail traders pay heightened attention to any cryptocurrency because of an ongoing pump, prices tend to retrace. This could well be the case for BTC so be careful when purchasing Bitcoin.
The technicals point to an incoming correction
The TD sequential indicator supports the thesis of a potential retracement on Bitcoin’s horizon. This technical index is about to present a sell signal in the form of green nine candlesticks on the 1-day chart. The bearish formation forecasts a one to four daily candlesticks correction before the uptrend resumes.
Historical data shows that the TD setup has been incredibly accurate at anticipating BTC’s local tops. When looking at the weekly chart, for instance, the last time a green nine candlestick developed, Bitcoin’s price tumbled over 16%. Thus, the current forecast must be taken seriously despite the ongoing uptrend.
IntoTheBlock’s “In/Out of the Money Around Price” (IOMAP) model reveals that Bitcoin sits on top of stable support. Based on this on-chain metric, roughly 500,000 addresses had previously purchased nearly 330,000 BTC at an average price of $17,200.
Such a massive demand wall may have the ability to absorb some of the selling pressure in the event of a sudden correction.
On the flip side, the IOMAP cohorts show little to no resistance barriers that will impede Bitcoin from advancing further.
A new bullish cycle unravels
Given the lack of resistance barriers ahead of Bitcoin, it seems like prices could advance further before a correction materialises. BTC could enter a parabolic advance over the next few hours that sees it retest the recent high of $18,500 or even retest previous all-time highs. Nonetheless, the high levels of greed among market participants and TD Sequential’s outlook suggest that investors must be cautious.
Now, more than ever, it is imperative to implement a robust risk management strategy to avoid getting caught on the wrong side of the trend. During the last bull market, 37% pullbacks were quite regular and similar price action may develop soon.