On April 13, 2021, the price of bitcoin (BTC) reached a new all-time high of $63,478 on Binance. Notably, the market sentiment surrounding BTC and ETH is extremely bullish. However, the short-term sentiment remains mixed. The price broke above $63K to reach a new all-time although the traders are not sure of what comes next.
Analysts use the term ‘price discovery’ when the price of the asset exceeds its previous all-time high. Today, the price of BTC reached the price discovery phase surpassing its previous record high as it made its way past $62K.
Whenever an asset reaches the price discovery phase, two scenarios might arise: it might become overbought and see a massive correction, or it will see stronger technical momentum and rally further. While bitcoin’s momentum is strong, traders are still unsure about the short-term trajectory of BTC.
One cryptocurrency derivatives trader, Scott Melker, said that the 4-hour BTC price chart has started to go into the overbought territory.
“Hidden bullish divergence printed a couple of candles ago, signaling continuation and invalidating the bear div. 4-hour RSI has finally reached overbought, let’s see how deep it can push.”
The major technical indicators show that BTC might be in the overbought territory in the near term, while the futures market also remains heavily overcrowded. The head of research at Arcane Research, Bendik Norheim Schei, mentioned that the 3-month premium on Bitcoin futures contracts is reaching 50%.
Premiums in the futures market show that the derivatives market is heavily crowded with buyers. In case the premiums are high, the risk of a severe sell-off as a result of investors taking profit grows.
“This is insane. Annualized 3-month basis (premium on BTC futures contracts) approaching 50%. 50%.”
Is It The Final Leg Of The Bull Run?
According to the founding partner of Bitazu Capital, Mohit Sorout, there is a possibility that BTC is in the last phase of its uptrend. He stated:
“Truth be told I seriously think we’ve entered the final leg of this $btc bull market. To be clear, final leg could be 2-3 weeks or even more. Price could reach 200k or even more who knows. Just don’t make irrational life decisions based on unrealized PnL.”
Nevertheless, there is a major probability that BTC does not top out like what happened in 2017. Instead, it might range and consolidate for a long time after its peak, just like gold in the early days.