Bitcoin is on the rise toward $12,000 but may face a stiff challenge to cross the price hurdle.
- The leading cryptocurrency by market value is currently trading near $11,900, a 1.2% gain on the day.
- Prices broke out of a descending triangle on Monday, confirming a resumption of the rally from Oct. 8 lows near $10,500 and opening the doors for the psychological hurdle of $12,000.
- "I expect bitcoin to reach $12,000," Patrick Heusser, senior cryptocurrency trader at Zurich-based Crypto Broker AG, told CoinDesk, noted in his analysis early Tuesday.
- Crypto analyst Lark Davis believes bitcoin is now positioned for a notable rally.
- However, a number of big sell orders positioned around $12,000 may make it harder for the bulls to engineer a quick move above $12,000.
- "The supply wall is still looming at around $12,000. We are seeing roughly 1,000 BTC sitting on offer [sell orders] on Coinbase up to $12,000 (Bitfinex, Binance, and Coinbase together have roughly $4,000 BTC on offer up to $12,000)," Heusser noted.
- That said, the underlying sentiment looks quite bullish if bitcoin can push past these offers.
- Traditional markets are also pricing in additional inflation-boosting U.S. fiscal stimulus.
- Open interest in bitcoin futures listed on the Chicago Mercantile Exchange, considered synonymous with institutional interest, jumped by over 20% to a seven-week high of $624 million on Monday, according to data source Skew.
- A rise in open interest along with a rise in price is often said to confirm an uptrend.
- Open interest rose sharply from $364 million to $948 million in the four weeks to Aug. 17. During that period, bitcoin rose from $9,100 to levels above $12,400.
- A break above the immediate resistance at $12,000 would shift the focus to the August high of $12,476.
- "If we move below $11,200, I will start worrying about my long position and will reduce it," Heusser said.
- Disclosure: The author holds small positions in bitcoin and litecoin.
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