Bitcoin reached a new high of over 13,800 US dollars in 2020.
Extreme greed has overtaken the crypto currency market.
If Bitcoin maintains support at over $13,000, prices could rise above $15,000.
Bitcoin made the headlines on Tuesday and rose to a new 2020 high of $13,831.
The sentiment indicators show extreme upward trend and even greed in relation to Bitcoin’s recent price action. Excessive greed often points to potential declines in the Bitcoin market. But on-chain readings suggest that Bitcoin prices could hit $15,000 and reach a new 2020 high.
New 2020 high makes investors greedy
Greed has overtaken the crypto currency market as Bitcoin continues to mark new year highs according to the Crypto Fear and Greed Index.
This fundamental indicator analyzes the emotions among market participants from various sources. These include volatility, social media and trends. The CFGI can determine when crypto enthusiasts overreact to price actions based on these data sets.
Phases of extreme anxiety occur during major price declines when investors are too concerned about further losses. During these times, the CFGI points out buying opportunities. Conversely, when investors become too greedy – as they are now at the new 2020 high of Bitcoin – this signals that the market is overdue for a correction.
Historically, this fundamental index has anticipated declines in the crypto-currency market with incredible accuracy. For example, in early September, $76 billion was erased from the total market capitalization of Bitcoin after the CFGI reached “extreme greed” in mid-August. The CFGI also reached extreme greed levels in February, and soon after that a $160 billion correction followed.
Now a similar event could be imminent, as the CFGI is currently experiencing high levels of greed among market participants.
Technical Analysis: No resistance for Bitcoin
After breaking out of an ascending parallel channel on October 21, Bitcoin entered a consolidation phase. Prices ranged mostly between the $12,800 support and the $13,300 resistance level. The dormant price action forced the Bollinger Bands to tighten on the BTC’s 4-hour chart, indicating that volatility was underway.
On Tuesday, a spike in demand allowed Bitcoin to break the overhead resistance, which confirmed the outlook for the Bollinger Bands as the reserve currency reached a new 2020 high. Should buy orders continue to accumulate, the BTC may be approaching the next psychological barrier, the June 2019 high of almost $13,900.
While the Crypto Fear and Greed Index indicates that a correction is imminent, the IntoTheBlock model “In/Out of the Money Around Price” (IOMAP) suggests otherwise. Based on this on-chain metric, Bitcoin anticipates little to no resistance. The only significant supply wall is between $14,425 and $14,830 and thus well above the current price level.
In the chart below, you can see that about 136,000 addresses bought almost 55,000 BTCs in the run-up to the new 2020 high of Bitcoin.
Given the unpredictability of the crypto-currency market, a downward outlook cannot be ruled out. Therefore, a sudden increase in sell orders could confirm the CFGI’s outlook and trigger a market-wide correction.
In such circumstances, the IOMAP cohorts show that the support of USD 13,000 could keep falling prices in check. More than 1 million addresses hold over 820,000 BTC around this price level.
What goes up, must come down
Despite these positive indicators, the behavior of the crypto market can be both volatile and emotional. Investors must pay close attention to the support level of $13,000, as cutting through this level would jeopardize the bullish outlook. Should this happen, the BTC could fall to the next critical level of interest, around $11,700.
On the other hand, as long as the $13,000 support continues, Bitcoin could be well positioned to reach another new 2020 high and exceed $15,000.