Bitcoin’s price hike to $12,000 won’t make sense until the bulls manage to turn this level into support

The price of Bitcoin is once again approaching USD 12,000, but this level can cause more damage than good if the bulls fail to convert it into support.

On Tuesday, Bitcoin (BTC) bulls gathered enough strength to push the BTC price slightly above the $12,000 mark, a level not seen since September 1st.
Snapshot of the daily performance of the crypto market. Source: Coin360

The move came after Monday’s large volume increase (October 19) to USD 11,822 was followed by continuous buying through Tuesday, which provided enough momentum for the bulls to push the price above the up channel to USD 12,038.

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Bitcoin futures volume per exchange. Source: Digital Assets Data

The rise to $12,000 was also accompanied by increasing volumes on Bitcoin Bonanza major futures exchanges from Monday through Tuesday, and earlier this week Cointelegraph reported that the latest CME traders‘ commitment report shows that institutional long positions reached a record high.

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Earlier this week, traditional markets took a hit, as investors feared that a stalemate between Democratic and Republican lawmakers in Congress would prevent the passage of a second round of economic stimulus aimed at easing financial pressure on small businesses and Americans in need of a second stimulus check.

Fortunately, by market close today (Tuesday, October 20), the Dow, S&P 500 and Nasdaq closed the day with marginal gains.

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In particular, the Dow closed 100 points higher after U.S. House Speaker Nancy Pelosi said she felt „optimistic“ about the deal reached between Congress and the White House.

The recent price action of Bitcoin has been slightly detached from the stock markets, leading some analysts on Twitter to call again for a „decoupling“, but all this seems a bit premature.
Bitcoin price vs. the S&P 500 (3 months)

Regardless of the position you take regarding the decoupling of Bitcoin’s price from the traditional markets, the digital asset is still one of the best performers in 2020, currently with a 65.4% increase so far this year.

Macro Asset Performance in 2020.

Bitcoin bullishers must convert the $12,000 into support

Today’s daily high of USD 12,038 is only USD 10 from the previous high recorded on September 1st, when the Bitcoin price formed a tweezers ceiling and corrected by 18.5% during the following days. So, naturally, traders have expressed mixed feelings about the price hovering around USD 12,000 again, especially considering that the last 5 visits to this resistance were followed by massive sales.

Bitcoin price is approaching USD 12,000 and could be the signal for the beginning of a new bullish cycle

As far as the price action is concerned, when the trend line of an upstream channel breaks near a key resistance level, it is normal for traders to pull back their profits, and this usually results in the price falling to retest the upstream channel trend line or a previous resistance such as USD 11,900 to determine if buyers are still optimistic enough to confirm the level as support.
BTC/USDT 4 hour chart.

In the 4 hour time frame, we can see that this is what happened when the price fell to USD 11,850 while investors were withdrawing their profits.

At the time of writing, Bitcoin is trading around USD 11,940 and with less than 2 hours until the daily close, an effort to close the day at USD 12,000 would be a positive sign.

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Given the recent importance of the USD 12,000 level, multiple failed attempts to overcome the resistance or a clear loss of momentum could motivate bearish traders to open short positions from USD 11,900 to USD 12,000. This would increase the possibility of a repeat of the massive sell-offs previously seen at the USD 12,000 level.