3 reasons why traders expect the rebound to continue after the Bitcoin price rose to $24,000

This is what traders expect after the price of Bitcoin exceeding $23,600 triggered a $138 million contraction in short contracts and brought the price of BTC to $24,200.

The price of Bitcoin (BTC) exceeded $24,000 on December 19, reaching a new all-time high. In Coinbase, the price of Bitcoin peaked at $24,200 and has since consolidated in the $23,500 to $23,800 range.

Three factors drove the price of Bitcoin up in a short period, bringing it to a record high. The factors are a massive short contraction, stacked sell orders at $23,600, and the market’s reaction to the proposed US Treasury self-covering portfolio rule.

According to Coinmarketcap, Bitcoin’s market capitalization is currently $442,241,910,354.

Be sure to read: Bitcoin Forecast: What will be the price of bitcoin in 2020 according to the experts?

A large short shrinkage occurs again at $23,600

According to data from Bybt.com, 138 million dollars of short contracts have been settled today.

The massive liquidation of short contracts occurred just as Bitcoin surpassed $23,600. The $23,600 area was a key resistance level due to stacked sales orders at major exchanges.

Bitcoin Exchange settlement data.

At Bitfinex, the resistance levels of $23,600 and $23,800 had large sales orders before the rally occurred. As the Bitcoin price started to rise, that pushed short positions and sellers into the $23,600 to $23,800 resistance range.

Typically, a short contraction occurs when a seller is forced to buy their position in the market because the Bitcoin price goes up. This causes buyer’s demand to skyrocket in a short period of time, often leading to a large upward breach.

It’s here: the U.S. Treasury proposes a law to control the crypto-currencies that go into self-custody wallets

The market is not affected by the U.S. FinCEN rule

On December 19, U.S. Treasury Secretary Steven Mnuchin unveiled a proposed rule on self-covered portfolios.

The rule requires exchanges to keep a record of withdrawals and deposits over $3,000 that originated from non-custodial portfolios. If transactions exceed $10,000, then exchanges would have to report directly to the Financial Crimes Enforcement Network (FinCEN).

Bitpanda believes that Bitcoin’s price increase is for institutional money

However, as the analysts explained, the rule itself is not as bad as industry executives initially thought. Cointelegraph reported that unless the proposal becomes law, Bitcoin’s price and the crypto market in general will likely ignore the news.

Jake Chervinsky, a general counsel for Compound Finance, said:

„Let’s look on the bright side for a minute. This doesn’t require KYC for every non-custodial portfolio transaction. It’s not a total ban on self-custody. It does not prohibit the act of using a network without permission. Actually… REALLY… it could have been a lot worse.“

Crypto-currencies are „a detour on the road,“ says the U.S. Comptroller of the Currency.

Still, despite the positive catalysts, in the short term, traders believe that Bitcoin could consolidate or retreat, due to the over-extension of the rally.

Scott Melker, a crypto currency trader, pointed to the Bitcoin Relative Strength Index (RSI) on the 4-hour chart to suggest that overbought bearish divergences are likely to occur. He said that:

„I closed my long leveraged position of $BTC. Overbought bearish divergences are likely, not guaranteed. But I would love to go a long way if given the opportunity. Especially a repeat of the old historical highs as a support“.