Bitcoin has been stuck in a rut in the time following its movement down towards $8,000, as it has failed to garner any decisive momentum and has continued consolidating around its near-term support level at $8,000.
Bitcoin’s bulls have remained stubborn in spite of the crypto’s clear bearishness in recent times, as margin traders have continued to stack long positions at BTC’s current price. Assuming that history rhymes, however, this may actually prove to be a bearish sign for the embattled cryptocurrency.
Bitcoin trades sideways as bulls defend key support level
At the time of writing, Bitcoin is trading down just over 2 percent at its current price of $8,020, which marks a notable retrace from its daily highs of over $8,200 that was set when bulls made a futile attempt to spark an upward movement.
The rejection that resulted from this movement instantly sent BTC reeling down to the support level at $8,000 that has held strong for the past couple of days.
In the near-term, analysts are eyeing a move down to $7,700, which may prove to be an ideal long entry position.
UB, a popular cryptocurrency analyst on Twitter, mused the possibility that a move down to $7,700 could be imminent, telling his nearly 25,000 followers that BTC’s recent price action is strikingly similar to that seen throughout the earlier parts of this month. He explained while referencing the charts below:
“$BTC – That was a disappointing h4 close. Similar PA has been repeating since early November. To further confirm this argument, I’d like to see the EQ flip into Resistance. My next area of interest for a long is ~$7.7k,”
Are growing long positions spelling trouble for BTC?
One interesting factor that traders may want to watch closely is the rising cost to long Bitcoin on margin trading platforms, which comes as BTC bulls continue to stack long positions in spite of its recent bearish price action.
Big Chonis, another popular analyst, spoke about this in a recent tweet, noting that BTC has historically dumped following periods of high funding rates for long positions, meaning that another downwards movement could be inbound. He explained:
“Funding rate rising again today as $BTC holds just above $8K…it is costing more to hold a Leveraged Long trade as this market is overweight LONG… recently when funding goes up #bitcoin dumps.”
The next couple of days may shine a light on whether or not this trend will replicate itself in the near-term, or if bulls will step up to the plate and send BTC surging higher.