It is significant that bitcoin has broken the much-feted $12,000 resistance level. We saw the price touch $12,000 earlier this month but then took a significant drop and only flirted with reaching that mark again until this week.
The past 24 hours’ stability above $12,000 is indicative of a strong ‘hodling’ mentality amongst investors, as opposed to regularly trading in and out of the cryptoasset. On-chain data backs this up, showing that the amount of bitcoin on exchanges has been decreasing since we saw the lows registered in March, when the price fell below $4,000.
In my view $14,000 is the next resistance level that we need to see broken. If the price continues to climb, this would really test investors’ mettle. Indeed, I would expect to see exchange inflows increase as investors look to potentially crystallise their gains. This could push the price back towards $12,000 or below.
It’s also worth noting that bitcoin, like gold, has been inversely correlated to the Dollar Index, so the recent rally above $12,000 may also have been buoyed by the weakening dollar.
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