The price of Bitcoin (BTC) hit $nineteen,469 on Coinbase, reaching its highest bespeak since its December 2017 superlative. Although the dominant cryptocurrency is close to surpassing its record high, there are some warning signs to take notation of.

Iii potential reasons Bitcoin faces the possibility of a pullback at $20,000 are a balderdash trap, overhead resistance and an overcrowded derivatives marketplace.

BTC/USD 15-minute chart. Source: TradingView.com

A potential balderdash trap scenario

A pseudonymous cryptocurrency trader known every bit "Bitcoin Jack," who called the Bitcoin bottom in March, laid out a potential bull trap scenario.

The term "bull trap" refers to a technical pattern wherein tardily buyers or long holders go trapped as the toll of the asset drops.

A potential Bitcoin price trend. Source: Bitcoin Jack

If Bitcoin rejects from the $xix,200 to $19,300 area, the trader suggested that a potential pullback is likely. He noted that the $16,000 level would remain a compelling macro back up level.

Referring to Bitcoin Jack's potential cost trend projection, a trader known equally "NekoZ" emphasized that such a trend is possible. He wrote:

"Seeing dips down to 12k is scary equally my levels are consolidation between xvi-18k. But yeah very possible, resistances don't get broken typically on the offset attempt. Which is shown from previous PA forth the way up."

$twenty,000 is a major resistance level for Bitcoin

If Bitcoin passes $xx,000, information technology would enter price discovery every bit it searches for a new ceiling. Above $20,000, in that location is no historical data or testify to suggest that BTC would elevation out at a certain price.

BTC could theoretically ascent to various targets many manufacture executives and analysts take shared throughout the past year. Most predictions range anywhere betwixt $25,000 to $100,000 for the ongoing wheel.

Hence, at that place would be significant interest from sellers to aggressively defend Bitcoin from moving past $twenty,000.

The funding charge per unit is extremely high

Sellers could discover it compelling to add together to their positions below $20,000 due to the high funding rates.

Across major cryptocurrency exchanges, the funding rate for the Bitcoin perpetual swap contract ranges from 0.05% to 0.1%. This means that buyers or long contract holders are paying brusque-sellers a large role of their positions equally fees.

Considering that funding rates are highly positive, brusk-sellers could find it compelling to aggressively short the sub-$20,000 region.

An active OTC market is a variable

Nevertheless, on-chain data prove that the over-the-counter (OTC) market is agile. This typically suggests that whales, high-cyberspace-worth investors and institutions could be purchasing Bitcoin.

BTC Fund Period Ratio hit a iii-yr low. Source: CryptoQuant

CryptoQuant CEO Ki Young Ju said that while some corrections could occur, $xx,000 would likely exist overtaken. Ki said:

"OTC markets are nonetheless active. $BTC Fund Flow Ratio hit the three-year depression a few days ago. Just iii% of transactions are used for exchange deposits/withdrawals on the network. Nosotros might take corrections, but I think it would eventually break 20k."