Bitcoin's short-term outlook depends on these key factors

The price of Bitcoin has seen its fair share of ups and downs over the past month. While the price has been able to hit new all-time highs in 2021, there have also been strong pullbacks.
In the past 24 hours alone, Bitcoin has breached the $50,000 mark before succumbing to selling pressure and trading below that level. However, as always, the question remains – how far will the next price rally be from its latest ATH. Interestingly, there are signs that traders won’t have to wait too long for this uptrend to emerge.

Large coin holders have played a key role in BTC’s growth over the years, and 2021 has only highlighted their importance in price appreciation. According to data provided by Santiment, the largest group of Bitcoin holders each owns more than 1,000 Bitcoins, and whales currently hold about 42.56% of the total supply.
On February 8, this figure was around 43.29%, a 54-week high, which one could argue fueled Bitcoin’s run to establish a new ATH that month. As its value approaches 43%, traders anticipate that this is a sign that whales are looking to drive another rally in the coming weeks.
Bitcoin market data supports this possibility. In Bitcoin’s market cycles, there has been a balance between selling at higher prices and re-entering the market at lower prices.
Long-term supply is decreasing as hodlers take profits in the bull run and increase the re-accumulation phase at cheaper prices. This provides the context for the recent price drop as Bitcoin still maintains strong fundamentals. In fact, its price correction is a symptom of hodlers selling high only to buy low and raise the price and complete a market cycle. This has been the case for the past few months and it is likely to continue in 2021.

It’s also important to note that while Bitcoin’s big rally has been some time in the past and can be considered to be in its mid/early stages, data provided by Glassnode highlights this aspect of Bitcoin’s price action by taking into account the coin’s reserve risk and contrasting it with its previous bull run.

At the time of writing, Bitcoin volatility continues to rise. In fact, according to market data provided by BitPremier, 30-day BTC/USD volatility is around 5.35% — a level not far off the high of 6% seen six months ago.
Increased volatility allows the coin to take further price action in either direction. Ergo, it also slightly increases the likelihood of a bigger pullback for the cryptocurrency. If BTC fails to maintain the $50,000 level, it could spell trouble for its price expectations in the short term.
However, given its strong fundamentals and past precedents supporting a new rally, traders can take comfort in BTC’s long-term prospects. Then again, this depends on resistance being flipped — a scenario that will materialize if Bitcoin is able to gain a significant amount of buyer momentum in the coming days. Such a trend reversal would allow it to further capitalize on its strong fundamentals while pushing it toward its latest ATH. (Baijiahao)