Despite diving into the $53,000-$56,000 area, Bitcoin closed November's trading around $57,000 thanks to impulse buys. However, the dive was likely too damaging for the cryptocurrency. Exchange flows, lack of demand in the futures market, and the limited upside raise concerns over a possible collapse of BTC.
The dip into the $53,000-$56,000 area did not push weak market players out - instead, it led to a massive amount of new long speculative positions, which are overheating the market significantly. Furthermore, the beginning of December saw a massive inflow of BTC on the crypto exchanges. According to Santiment, BTC exchange inflows exceeded outflows by 10,000 BTC, equivalent to $580 million. CryptoQuant analysts reported an inflow of 18,000 BTC, which they interpreted as a sign of a price dump. The Bitcoin market is very likely to slump before a new uptrend begins.
Recent market research indicates that open interest for bitcoin futures has remained unchanged since mid-November, indicating a lack of demand, market overheating and a need for liquidation of long positions. If the price dump does not happen in the near future, the market could be pushed down by the congressional hearing on cryptocurrencies on December 8, featuring several crypto CEOs. If the hearing goes well, the crypto asset would soar, but it would overheat BTC even further, increasing the price dump's damage to the entire bull market.
It is likely the downward move would be an impulsive one - bitcoin is likely to drop into the $53,000-$55,500 range at the 0,618 Fibonacci level. Here, the downward movement could slow down, and BTC could try to consolidate. However, BTC could break below this range, dropping below $50,000. The key support area would be $46,700-$48,500 in such a bearish scenario. It is more likely that BTC would reach $53,000 and possibly even $51,000, but the ongoing bull market could leave the fundamental levels intact.
