Bitcoin price sees traders balancing on the sharp end of the blade

• Bitcoin price spiked up in the late hours of US trading on Wednesday but closed negative for the day.
• BTC price is currently facing the 55-day Simple Moving Average on the upside.
• Traders are torn between two scenarios that are 180 degrees apart.

Bitcoin price action is slowly but surely trying to move north on price charts as traders try to continue and hold on to the momentum that started on Monday morning. Unfortunately, that winning streak got cut short near the US closing bell on Wednesday, although a fierce recovery in the last minutes erased most of the incurred losses but still did not prove strong enough to turn the red candle into a green one for the day. This nervous price action shows the imbalance in the price action as both buyers and sellers try to preposition for the next leg up in the last quarter of the year, which could turn very bullish, or yet again very bearish.

BTC price spins the bottle

Bitcoin price action is at risk of becoming unstable as both bears and bulls are trying to get their foot in the door and dictate the direction of the trend. Both scenarios have their advocates. On the one hand, there has been no real change in the current tail risks, which probably heralds more downside to come, especially should one of those elements escalate. On the other hand, a lot has been priced in by now, so any relief or just one tail risk fading should be enough for a substantial leg higher in Bitcoin price action.

BTC price is currently undergoing a rejection from the 55-day SMA at $20,444.54 which is still still providing a moving cap on the topside, muting any price action upwards. The risk is that price action tanks further as bears build up large chunks of short positions. This could see BTC price drop towards $19,036 or even $16,020 as geopolitical risks remain elevated with Russia, North Korea and Taiwan as elements to monitor.

BTC/USD Daily chart

The bullish camp is gaining some attention, however, because many central bank moves to tighten have already been priced in by now, and this might lead the US dollar to start taking a step back, opening up some room for BTC price to move higher. As markets have grown accustomed to the current monetary policy settings, the worst has been priced in, and equities will start to take a leading role by rallying for several days. If this scenario plays out further, BTC price could break above the 55-day SMA and rally towards $21,969 or even $23,878 for the coming weeks.