Traders expected it to hit $20,000 quickly when Bitcoin’s price hit a new ATH on most cryptocurrency exchanges. The crypto-asset, however, soon faced a wave of corrections following the same wave of corrections. Even as its market cap crossed $354 billion and became the 7th largest currency in the world.
To many, since it also often counts as a psychological milestone, the $20,000 level may also seem unattainable. Psychological, but important, particularly since for most retail traders, that level was the closest to its previous ATH. On-chain analysts have argued that the active supply must stay low consistently or preferably hit lower for the price to breach $20,000. Besides, demand should increase as well. Nevertheless the demand is mainly driven by organisations such as Grayscale and most HODLers are selling (2y to 3y).
Consider the map of expended HODLer Bitcoins to put this idea of liquidity into perspective. Bitcoins purchased between the $5,428 and $11,000 price range are quickly hitting exchanges. However, traders and HODLers from 2017 and before are selling, booking unrealized profits for fear of corrections hitting harder. The percent active supply from the last 1Y is low. This is counterintuitive because mass FUD may lead to a price drop and crossing $20,000 or maintaining consolidation at the levels under that mark may become even more difficult.
Volume of Bitcoin Options has dropped steadily
Not hitting the level of $20,000 can also counterintuitively lead to corrections. The volume of Bitcoin Options has dropped steadily since 30 November on derivatives exchanges. While the OI is down by 15.6 percent. The rapid loss of interest evident from the Skew charts suggests. That hitting $20,000 on spot exchanges may be more difficult for the price.
Sell orders are stacking up at $20,000 on spot exchanges, suggesting that this is how far retail traders expect the price to go. Although the average price per Bitcoin for BTC worth $60 million was above $19,000 for MicroStrategy, retail traders expect a pullback in the short term and are gearing up for the same.
In such a situation, the $20,000 journey may be a long or even an impossible one. Fearing sell-offs in the short run can lead to a massive sell-off for retail traders. The significant price level is $19,000 below $20,000, a level the asset has traded for nearly a week above $19,000. While the market capitalization is holding firm, the only way to $20,000 will be beyond the negative sentiments and fears of correction in light of the increasing supply.