Bitcoin returns to $12,000 for the sixth time. Whether it can form a support level will be the key

Bitcoin (BTC) bulls gathered enough strength on Wednesday to push the price back above $12,000 for the first time since September 1.

On Monday and Tuesday, trading volumes on major Bitcoin futures exchanges surged, with BTC futures prices breaking through $12,000. According to the latest CME report, institutional long BTC positions have hit a record high.

(Figure: Exchange futures trading volume, data from Digital Assets Data)

Is Bitcoin really decoupled from traditional markets?

Traditional markets were hammered earlier this week as investors worried that the impasse between Democratic and Republican lawmakers in the U.S. would hinder the passage of a second round of economic stimulus. Fortunately, by the close of trading today, the Dow, S&P 500, and Nasdaq ended the day with slight gains.

Bitcoin’s recent price action has somewhat deviated from that of the stock market, leading some analysts to once again voice the idea of ​​“decoupling” on Twitter, but it all seems a bit premature.

Regardless of whether Bitcoin prices are truly decoupling from traditional markets, the digital asset is still one of the best performing assets in 2020, having risen 65.4% since the beginning of the year.

Whether the support level can be formed will be the key next

Today, BTC’s highest point is $12,038, which is just $10 below the previous high on September 1, when the Bitcoin price formed a tweezer top and corrected 18.5% in the following days. Therefore, traders are naturally concerned about BTC price hovering around $12,000 again, especially considering that the last five times BTC hit this resistance level, there was a lot of selling.

In terms of price action, when the trendline of an ascending channel is broken near a key resistance level, some profit-taking usually occurs, which usually causes the price to fall to retest the ascending channel trendline or previous resistance level (such as $11,900) to determine if buyers are still bullish, thereby confirming that level as support.

At press time, BTC is trading around $11,980, and a prolonged stay above $12,000 would be a positive sign.