Analysts expect a setback in the Bitcoin market after BTC reaches $13,000 in PayPal news.
The price of Bitcoin (BTC) exceeded $13,000 for the first time since June 2019. The optimism around PayPal’s support for buying cryptosystems led to a general improvement in market sentiment in a short period of time. Immediately after the PayPal news was reported, Bitcoin Profit reviews price rose from $12,300 to $13,200 at the day’s peak. Although the medium-term outlook for the cryptcoin market remains positive, analysts do not rule out the possibility of a reversal.
Bitcoin rose 25.5% in the 13-day period since October 8th. Initially, BTC’s rebound began with the benefits of the altcoins and DeFi tokens that arrived at BTC. Industry players such as Sam Bankman-Fried, CEO of the FTX derivatives exchange, revealed a cautious stance toward DeFi tokens, admitting that he placed a net 200 Yearn.Finance (YFI) short transaction, equivalent to about $2.75 million. While the shorting may not have caused DeFi to fall, it showed that sentiment around DeFi is declining.
How are things going to go for PayPal’s entry into the Bitcoin world?
However, analysts are slightly cautious about the immediate trend in Bitcoin prices. The overwhelming majority of BTC holders are making profits, which could lead investors to take out money as a profit. BTC is also approaching $14,000, which previously acted as an important resistance level for BTC in mid-2019. In June 2019, when BTC reached $13,970 at Binance, it quickly retreated to $10,525 the next day. Over the next 21 days, BTC fell to $9,252, recording a 35% drop.
Is a drop in profit taking near?
Guy Hirsch, CEO of eToro’s US trading platform, emphasized to Cointelegraph that the news from PayPal is „very important“, as prominent investors and venture capitalists, including Social Capital’s chairman Chamath Palihapitiya, are echoing a similar sentiment. The venture capitalist said all the major banks are „having a meeting about how to support Bitcoin.
The crypto market has been particularly optimistic about the prospects of PayPal integrating crypto currencies for two main reasons. First, there’s continuing support for Bitcoin from another large payment conglomerate, Square. Second, it reaffirms the perception of cryptomonies as an established asset class. Although the positivity around the news, in the short term, Hirsch said there could be a drop followed by a steady rise:
„This increase in adoption is likely to drive prices up, but I think it’s too early to fully understand the impact of this announcement on the markets, and you wouldn’t be surprised to see profit taking driving prices down in the short term before they start a slow, steady climb.
Denis Vinokourov, head of research at the exchange and a Bequant broker, believes that in the short term, at least, consolidation would lead to a healthier uptrend for BTC rather than an exponential upturn. There is little resistance between $14,000 and $20,000 because the previous upward cycle of 2017 will end abruptly. But, according to Vinokourov, that does not mean that the path to a new historical high is easy.
When 98% of Bitcoin’s directions are profitable, as reported by Glassnode researchers, a profit-taking phase is inevitable. Whether new money coming into the Bitcoin market will offset the profit taking of existing investors and scammers is the short-term variable. Therefore, currently, cash inflows are about to become a very relevant statistic, which has recently fallen to a yearly low. If the money inflows start to increase again, it would mean that there is likely to be a setback in profit taking, according to Vinokourov. He added:
„In general, markets are approaching territory that does not offer much in the way of price discovery potential but, for healthy markets, you would expect consolidation rather than exponential traffic in one direction.
There’s a strong possibility that BTC will see a continuation of its current rebound after a short period of consolidation, as according to Skew’s data, all Bitcoin markets, including spot, derivatives and options, are showing a high level of demand after the news