During the early trading hours in Asia on Monday, Bitcoin (BTC) surged towards $90,000 as a significant market indicator hinted at a potential “tactical” upside for its price.
Key insights:
Bitcoin has risen 6.5% from recent lows, increasing hopes for a “Santa Rally” with targets reaching up to $120,000.
The trend of short liquidations is prevalent, which could provide support for bullish investors.
To ensure a sustained recovery, Bitcoin’s price must remain above $84,000.
“Santa rally” discussions resurface as BTC gains $5,000
Data from Cointelegraph Markets Pro and TradingView indicated that BTC/USD reached an intra-day high of $89,850, reflecting a 6.5% uptick from a local low of $84,400.
Analyst AlphaBTC noted in a post on Monday that Bitcoin is “looking for a Santa Rally.”
An accompanying illustration suggested that the ongoing recovery might propel the BTC/USD pair higher, first towards the yearly open at $93,300 and later into the $98,000 and $100,000 resistance zone.
“Let’s hope for an early X-mas gift and send it to $98-$100K.”
Another analyst, Captain Faibik expressed that Bitcoin is poised to break from a bullish megaphone pattern after consolidating within a significant range from $82,000 to $95,000 since November 22.
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“The longer the period of consolidation, the stronger and larger the ensuing rally will be,” the analyst emphasized.
The target measured from the megaphone pattern suggests a rise to $120,000, marking a 34% increase from the current price.
However, not all analysts are convinced the “Santa Rally” will happen. Some six-figure BTC price forecasts run counter to warnings of a pullback to $70,000.
Monitoring the “Santa Rally” interval (Dec 24 – Jan 2) over the past five years, Ardi observed that Bitcoin has shown “diminishing returns and actual sell pressure,” with the +34.5% gains in 2020 being an exception.
Based on the four-year cycle, the chart below indicates that “2025 mirrors the post-halving position of 2021,” when BTC saw -7.9% returns during this time, the analyst noted, adding:
“Thus far in December, we are witnessing similar structural signatures as 2021, with major players offloading during the festive period.”
Bitcoin’s derivatives provide “tactical” advantage to bulls
Bitcoin’s current market conditions present a tactical upside, bolstered by a favorable derivatives structure in the futures market, according to CryptoQuant analyst Axel Adler Jr, who mentioned in a post on Monday:
“BTC is on the verge of a Santa rally: the Regime Score is optimistic but not overstretched.”
The chart below illustrates that Bitcoin’s regime score stands at 16.3%, situating the BTC/USD pair in the upper neutral zone, a historically positive indicator.
The bulls’ key advantage stems from the derivatives liquidation framework, indicating a dominance of short position closures that could exert upward pressure on the price.
The long/short liquidation dominance oscillator has decreased to -11%, indicating a rise in forced short position closures, while its 30-day moving average remains positive at 10%, as depicted in the following chart.
“This divergence highlights a recent uptick in forced short position closures,” he added, stating:
“The prevalence of short liquidations provides tactical momentum for the upside.”
Bitcoin’s crucial support level remains at $84,000
Bitcoin has consistently maintained its price above the $84,000 psychological threshold since retesting it on November 11. This remains a critical level of interest for traders, which needs to be upheld to avoid further declines.
Trader and analyst Daan Crypto Trades commented that $84,000 “is a vital zone for bulls to protect on higher timeframes.”
Glassnode’s cost basis distribution heatmap emphasizes the significance of this level. Immediate support lies between $84,000-$85,600, where investors obtained around 976,000 BTC.
Maintaining a position above this threshold is crucial for regaining momentum towards $100,000 or possibly higher.
As reported by Cointelegraph, bears aim to break through the support at $84,000, setting their sights on a subsequent target of $80,000.
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This article does not provide investment advice or recommendations. Each investment and trading decision carries risk, and readers should conduct their own research when making choices. While we aim to deliver accurate and timely information, Cointelegraph does not promise the accuracy, completeness, or reliability of any content presented in this article. This article may include forward-looking statements subject to risks and uncertainties. Cointelegraph will not assume liability for any loss or damage arising from your reliance on this information.
