Analysts explain why buying Bitcoin at $ 16.000 is extremely risky

Investors who bought Bitcoin at $ 16.000 will face volatility when the cryptocurrency closes above $ 16.000, according to Marc Principato of Green Bridge Investment.

According to the CEO, Mr. Marc Principato predicted the $ 16.000 level is an opportunity for traders to lock profits. He also added that sellers will most likely bring BTC back to lower levels and warned the community they should not open any long positions near the $ 16.000 zone.

Principato said in a note published on Monday:

Our plan is to require the following 3 factors before we can take any risk. First, we need to reach the pre-set level ($ 14.250 to $ 13.600). Second, we need to see price action make a clear setup (chart pattern, candlestick pattern, etc.). And thirdly, we need confirmation

He added:

When we can measure risks and determine the probability of success, then we do a new turnaround trade and share our ideas.

Basic principles

The above statement follows the massive surge of Bitcoin, from $ 10.500 in September 9 to [nearly] $ 2020 in November 16.500. Many analysts agree that the prospect of extremely low interest rates and buying demand bonds has resulted in lower US Treasury yields. That has prompted investors to pour money into assets like Bitcoin.

Some also believe that the growing financial deficit problem, led by the US government's $ 2.3 trillion aid that has allowed some of the liquidity to flow into the Bitcoin ecosystem. There are also some bullish catalysts coming from institutional investors and especially when PayPal decides to launch a Bitcoin buy-and-sell service on its payment platform.

However, Andrew Gonci - executive director at Green Bridge Investment - asserted that Bitcoin traders had assumed all the bullish catalysts when it was they who brought the price to $ 16.500.

Capital inflows increased

Meanwhile, blockchain analyst Willy Woo believes that more money flows into the Bitcoin market than outflows. He cited Realized Price, a measure of the estimated average cost base that Bitcoin investors paid. They have shown this to be the best and "healthiest" rally compared to last year's "$ 4.000 - $ 14.000" rally.

According to Willy Woo, healthy price action happens when BTC price Watch closely with investment inflows and outflows.

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