- BTC's push beyond $20,000 over the past few days has hurled the cryptoasset into uncharted waters and a new all-time high being set every few hours or so.
- Given that BTC has no prior price action with which market participants can lean on, it should be assumed that BTC is just as likely to continue pushing higher as it is to conclude what is currently a 6-day winning streak that has generated a handsome +25% return.
- However, what we can say with a strong degree of certainty is that BTC is in "price discovery mode." That is, BTC is finding resistance, backtesting and confirming new support, and retesting resistance.
- Such is precisely what we've seen over the past month; on both attempts at breaking $20,000, we saw BTC confirm the $16,500 and $18,200 levels as support before ultimately cracking $20,000. In the midst of this process, we saw BTC's 14-day RSI mean revert lower and thereby position BTC to rip to the upside.
- With this in mind, one could argue that although BTC could continue trading higher and remain in "overbought" territory for quite some time, a backtest of $20,000 support should come sooner or later.
- Just to set the stage, if we extrapolate off of BTC's current price using price action between November 16 - December 16, we can see that BTC could approach $25,000, get rejected and subsequently backtest $20,000 support, and then eventually move through $25,000. Such a move could coincide with BTC's 14-day RSI trending inside of "overbought" territory before eventually mean reverting lower to allow for another push higher.
- But let's not forget, there are no guarantees when it comes to BTC - especially in a bull market cycle.
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