Will Bitcoin see another trend reversal in 2021?

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Bitcoin’s ^[1] ongoing price rally has encountered resistance at the $39000 level, despite the momentum being relatively high. The price has dropped to $34000 and below a few times in the recent past and institutional investors are buying the dips based on data from Whalemaps.

Map of unspent Bitcoins || Source: Whalemaps ^[2]

Interestingly, there was a sell-off on derivatives exchanges this week when the price rallied closer to $40000. The recent dip may be a result of increasing active supply and reduced HODLer reserves. Additionally, exchange reserves have also reported a significant increase. Though there is continued criticism from regulators, the price has not dropped below the $30000 level and this signals a positive sentiment among traders.

Bitcoin ^[3] is currently trading at 36.1k based on data from CoinMarketCap. Exchange inflows play a critical role in driving the price and there were 561 BTC inflow transactions to all exchanges in a single block on January 15. Ki Young Ju, CEO of cryptoquant.com tweeted that Bitcoin might retest 34.4k again. His comments are in light of the recent stablecoin deposits to derivative exchanges. Investment flow has increased to derivatives exchanges rather than spot exchanges in the past week. Based on this change, it is likely that Bitcoin’s ascend to the previous ATH at $41000 level may be interrupted by a drop to $34400 level again. In the recent sell-off, over $150 Billion was wiped out

Will Bitcoin see another trend reversal in 2021?

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