With 2024 just days away, Bitcoin looks poised to break out above a key resistance level going by the pattern it has been exhibiting for a long time, according to crypto analyst Rekt Capital. Meanwhile, excessively bullish trader speculation has driven funding rates on exchanges to 25-month highs. If prices move against these overly confident traders, the cryptocurrency could see significant volatility.
Multi-Year Resistance Level in Focus
As Rekt Capital highlighted on Twitter, Bitcoin tends to face rejection at a major price level during the first three years of its four-year market cycles before finally breaking through decisively in year four. In the current cycle which began in 2020 following the latest Bitcoin halving event, the key resistance sits around $46,000.
Rekt Capital stated: “#BTC In every Four Year Cycle, there is always a resistance that rejects price for 3 years (black) But in a new Candle 4, this resistance is finally broken In this Four Year Cycle that resistance is $46000 In 2024 (Candle 4), $BTC will break $46000 easily.”
With Bitcoin currently trading around $42,000 and 2024 just days away, Rekt Capital believes the leading cryptocurrency is on the cusp of breaking out above this multi-year ceiling and continuing its bull run higher.
Excessive Speculation Creating Risks
However, crypto trader Maartunn warns that current market conditions also pose risks if the optimistic bias proves overblown. According to Maartunn, funding rates on exchanges have hit 25-month highs, indicating traders are excessively betting on further price increases.
As Maartunn noted on Twitter: “$BTC Funding Rates hits a 25-month high Traders are just speculating on higher prices, which is no problem if the price doesn’t move against them. Otherwise it could be bloody.”
In other words, traders are paying substantial premiums to go long, likely out of an expectation that Bitcoin will rally as it heads into 2024. If the price instead drops and moves against these highly leveraged bullish bets, it could force a cascade of liquidations and a much sharper sell-off.
In the days ahead, Bitcoin appears positioned for a significant price movement either higher or lower. While multi-year technical patterns suggest upside is more likely, short-term indicators highlight the risks of overleveraged traders being caught on the wrong side of the trade if optimism proves unwarranted. Traders should brace for amplified volatility around the 2024 open.
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