Bitcoin's bull run has just begun but a correction is coming before new all-time highs

Now that Bitcoin broke above $17,000, there are many bets on it to hit a new all-time high by the end of the year. However, the market may be doomed for another downside correction before the next victorious wave happens. And that is something BTC investors should be aware of. 

Bitcoin on-chain metrics support a bullish outlook

At the time of writing, BTC/USD is hovering around $17,000 and most likely the pioneer cryptocurrency will have its first daily candle above the mentioned threshold in many months. This development will create strong bullish momentum and anticipation of further price increase in the community. 

However, there is more than just excitement about it. For instance, the open interest in Bitcoin futures market on CME  reached $975 million and may hit $1 billion as early as this week, provided that the spot market retains positive bias. 

BTC Futures on CME, Arcane Research

BTC supply on exchanges dropped below 700,000 coins for the first time since October 2018, signaling that the market has entered an accumulation phase. The selling pressure has been decreasing. Naturally, the reduced Bitcoin supply amid growing demand leads to a substantial price increase.

Bitcoin supply on exchanges

Macro factors lure investors to the cryptocurrency market

External factors also create a positive environment for Bitcoin as fiat currencies are debased by the money-printing habits that the global central bankers are adopting. As FXStreet recently reported, Bitcoin is now more valuable than the national currency of many large economies, including Russia, Sweden and Australia.

While this cryptocurrency is small when compared to gold, USD or euro, it will catch up quickly if governments persist in their attempts to escape recession via monetary easing.

Joe Biden's presidency is another potentially positive factor for the cryptocurrency industry as the President-elect supports innovations and favors more aggressive stimuli. Moreover, he is expected to choose Bitcoin-friendly people to fill some top positions in his administration. 

Also, institutional investors have been paying attention to the industry as big players such as Fidelity Investments, Square Inc. and MicroStrategy Inc. have recently increased their BTC exposure.

At the same time, experts emphasize that Bitcoin is far from being overhyped now. According to Guy Hirsch, eToro's Managing Director, this rally is less speculative than the one seen in 2017, which is a good thing in the long run.

Speaking in an interview with Bloomberg, he explained:

At the height of the crypto boom, he was seeing around 120,000 Bitcoin-related tweets a day. That number now oscillates between 30,000 and 60,000, according to data from eToro and The Tie.

Beware of the short-term correction; it is inevitable

 The TD Sequential indicator presented a sell signal on Bitcoin 4-hour chart, adding credence to the short-term sell-off. The bearish formation developed as a green nine candlestick anticipating a one to four three-day candlesticks correction. A red two candlestick trading below a preceding red one candle will serve as a confirmation that Bitcoin is poised to retest the local support before the upside is resumed.

The initial bearish target is created by 0.76 Fibonacci retracement level at $16,300. Once it is out of the way, the sell-off may gain traction with the next focus on  $16,000.

BTC/USD 4-hour chart

On the other hand, further growth looks like the path of least resistance now as there are no technical barriers between the current price and the all-time high on approach to $20,000. A sustainable move above $17,300 will invalidate the short-term bearish scenario and increase the bullish momentum.