Bitcoin Price Could Face Pullback As Bull Run Suffers 'Lethargy', Analyst Says

QCP Capital, a Singapore-based trading firm, warned of an imminent pullback after the recent push above $12,100 and immediate retracement at $11,700. The firm said the benchmark cryptocurrency is suffering from "lethargy" after it failed to sustain the momentum above $12,000.

In a message to its subscribers on Telegram, QCP Capital said the breakout above the ascending triangle formation has failed to deliver the buying pressure needed to sustain it, thus invalidating the bullish setup, Coindesk reported. This is usually a sign that the bulls are finally exhausted and the price will gradually solidify until there is enough momentum to break out again. Alternatively, bears might be able to take over to push the price lower because of weak buying pressure.

The firm also said the breakout past $12,000 was merely short-squeeze driven. "The failure to sustain it means $12,000 to $12,500 remains a key resistance area for the benchmark cryptocurrency for an extended period," QCP Capital added.

The support areas, the firm noted, would be at $11,600 and $11,700. Should those two break, QCP Capital said Bitcoin would retest $11,000. Still, the firm is bullish in the long term and will remain optimistic about the future price of Bitcoin as long as the price does not go below $10,500, which was the last yearly-high before the March 2020 crash.

The current rally in Bitcoin might have already gone too far, said Chris Thomas, the head of digital assets at Swissquote Bank. "It’s natural we are seeing profit-taking and weak buying at higher levels," Thomas told Coindesk.

But it is unlikely for selloffs to continue in the medium-term. A recent report from analytics firm Glassnode said the current Bitcoin supply in exchanges has decreased significantly since June. While the March crash has seen traders taking the opportunity to buy more Bitcoins at a discount, there have been more Bitcoins on exchanges at that time than what is there now.

As per the law of supply and demand, as Bitcoin’s demand continued, the decreasing supply would only cause the benchmark cryptocurrency’s value to increase.

This is echoed by Bloomberg’s new August Crypto Report, which said something has to go really wrong for Bitcoin’s price to not continue to appreciate in the long term.