Bitcoin price eyes $56,000 but lack of leveraged long positions may hinder rally

Bitcoin price is forming a technical pattern that suggests that it could surge by 15% toward $56,219 if BTC manages to slice above a critical level of resistance. However, the potential for the bellwether cryptocurrency to surge may fall short as the spread between futures and spot prices has shriveled compared to the rally earlier this year.

Bitcoin price aims for 15% bounce

Bitcoin price has been forming an inverse head-and-shoulders pattern on the 12-hour chart, suggesting a bullish outlook for the leading cryptocurrency.

The governing technical pattern suggests that Bitcoin price may be headed for a 15% climb from the neckline. However, a few obstacles remain before BTC could achieve the target given by the chart pattern at $56,219.

BTC/USDT 12-hour chart

The first obstacle is at the breakout line given by the Momentum Reversal Indicator at $48,000, then the neckline of the inverse head-and-shoulders pattern at $49,450. 

The IntoTheBlock’s In/Out of the Money Around Price (IOMAP) metric indicates that the largest cluster of resistance ahead for Bitcoin price is at $49,405, where 454,780 addresses purchased 338,040 BTC. 

BTC IOMAP

Investors should note that only if Bitcoin price slices above the neckline of the prevailing chart pattern would confirm the bullish thesis, and only then can it be used to anticipate price moves. 

Should Bitcoin price surge above the neckline, BTC still faces the 61.8% Fibonacci extension level at $51,167 before reaching the target given by the technical pattern. 

Currently, Bitcoin price finds meaningful support at the 50% Fibonacci extension level at $46,901. The IOMAP shows that there appears to be ample support for the leading cryptocurrency, with the next large cluster of 801,870 addresses that purchased 422,280 BTC at an average price of $46,298.

However, should Bitcoin price fall below $46,901, the bullish outlook could be at risk. A spike in selling pressure could see BTC crash toward $44,173, voiding the governing technical pattern, and the rally could be short-lived.

In addition, the recent recovery from July lows has been missing a key aspect, as cryptocurrency traders have not increased their leverage. Demand for leveraged long positions has been muted, as the spread between the Bitcoin futures and spot price has diminished compared to the February rally this year.