Bitcoin price has been on a wild run since October 7 after bouncing off a low of $10,546. On October 21, the digital asset broke its correlation with the stock market and major indices like the S&P 500, cracking $12,000 and $13,000 on the same day.
The current price of BTC is $16,076 after a slight rejection from its two-year high at $16,480. There is certainly a lot of FOMO in the cryptocurrency market right now as Bitcoin continues dominating other coins reaching a 64.6% total market dominance, the highest point since June 2020.
Many investors seem to be worried about Bitcoin’s price as it approaches its all-time high at $20,000 again. Some indicators suggest that the flagship cryptocurrency could be on the verge of a major correction after a 57% price growth over the past two months.
Will FOMO prevent Bitcoin from seeing a pullback?
Timothy Peterson, a veteran trader and Global Macro Manager at Cane Island Alternative Advisors believes Bitcoin is a ‘little bubbly right now’.
#bitcoin is in bubble territory when the 30-day return exceeds the upper threshold of address growth. Bitcoin is a little bubbly right now. pic.twitter.com/pE6Ap7KuQM
— Timothy Peterson (@nsquaredcrypto) November 14, 2020
In his tweet, Peterson mentions that Bitcoin is currently in a ‘risk zone’ looking at the Sentiment chart. History has shown that once BTC crosses into this zone, it is bound for an average 20% pullback.
In this particular scenario, Bitcoin would drop towards $13,000 to re-test this level if this prediction is accurate.
In the short-term, the most important indicator is the 12-EMA on the daily chart which has been holding as a support level since October 8. A breakdown from this EMA would be significant and the beginning of a potential trend reversal. The 26-EMA would also be a strong support level in that case.
The loss of both EMAs and confirmation of a daily downtrend could potentially drive Bitcoin’s price towards $13,000. However, it’s also worth noting that the digital asset is facing very little resistance to the upside.
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