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Remember, remember Bitcoin tanks in September: Kraken report

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4 Monaten ago

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In its August 2020 volatility report, U.S.-based cryptocurrency exchange Kraken has predicted that September will bring excessively negative returns for Bitcoin (BTC).

The report notes that historically, September is Bitcoin’s worst-performing month, with an average return of -7%. It points out that as Bitcoin has underperformed its average returns for most months of 2020, this month’s performance was likely to be even worse than usual.

Despite the bearish outlook for the short-term, the report identifies some glimmers of hope, including that a record share of Bitcoin’s supply has not moved in more than 12 months — with Kraken noting that “historically, this dynamic has foreshadowed a new bull market.”

The report adds that Bitcoin is likely to see aggressive fluctuations as the markets move further away from July’s local low or “suppressed pocket” for volatility:

Twelve times in the past, Bitcoin’s annualized volatility bottomed between 15% and 30% before climbing, on average, to 140% and returning +196% over 94 days. As of the end of August, 38 days have passed since the volatility low of 23% set on July 24, with volatility rising to 44% and price gaining +25%

“So, history indicates that we may have ample room for higher volatility and gains in the months ahead,” the report explains.

Kraken also notes that September has historically produced the weakest volatility on average, suggesting BTC may not see accelerated volatility until at least the fourth-quarter of 2020.

However, Kraken’s crystal ball is not necessarily a reliable guide to future events, with the exchange recently predicting that a BTC rally of between 50% and 200% was imminent on August 10 — when Bitcoin was trading for between $11,500 and $12,000, just $500 from the local top that precipitated the recent 20% retracement.

The report notes that August also saw Bitcoin’s correlation with gold push into a new all-time high of 0.97, before sharply falling back to 0.25.

Bitcoin similarly produced high correlation with the S&P 500 throughout most of August. After posting a local top of 0.84, correlation between BTC and the S&P 500 crashed down to minus 0.02, suggesting that Bitcoin may be breaking away from the meta-trend of the legacy markets.



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Bitcoin

‘Bullish year ahead’ — Bitcoin primed for Q1 2021 gains, strength index suggests

Published

12 Minuten ago

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Dezember 29, 2020

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The monthly relative strength index (RSI) of Bitcoin (BTC) shows the dominant cryptocurrency is primed for another rally.

Is 2021 an ideal time for a Bitcoin rally?

The RSI is a momentum indicator that measures whether an asset is overbought or oversold. When the RSI surpasses 75, it signals the asset is overbought, and when it drops below 30, it means the asset is oversold.

A pseudonymous trader known as “Crypto Capo” noted that the monthly RSI of Bitcoin is set to close above 80. Historically, when this has happened, BTC has saw a strong rally afterward.

Although the monthly RSI of Bitcoin is above 80, which is technically oversold, BTC’s RSI tends to become oversold for prolonged periods during a bull cycle.

The monthly RSI of Bitcoin. Source: Crypto Capo

Hence, traders often refer to an oversold RSI on a high time frame chart, like the monthly candle chart, to forecast an extended rally in the short term to medium term. The trader said:

“Monthly candle is about to close above 80. When this happens, bullish trend continues, with an avg. return of 1010.87%. Each cycle is shorter.”

However, the trader emphasized that one indicator cannot accurately predict the price cycle of Bitcoin. Crypto Capo explained that the combination of a few indicators could serve as guidance for the future. He wrote:

“You cannot base a prediction on an indicator. What we do is combining several methods to have a guideline for the future, to see what is more likely. But in the end, we adapt to what the price does in the present.”

“Bullish year ahead”

Traders have differing perspectives on where Bitcoin is headed in 2021, but most traders remain overwhelmingly bullish.

Cointelegraph Markets analyst Michael van de Poppe said he anticipates Bitcoin to reach $65,000 to $85,000 by next year’s end. He stated:

“I’ve got to revise my view on the potential level of $BTC at the end of 2021. Through this recent surge, I’m expecting it to be between $65,000-85,000 at the end of 2021. Bullish year ahead.”

Meanwhile, the options market is pricing in a 22% chance of Bitcoin achieving $120,000 by next year, which could also serve as a potential guideline on where BTC is heading in 2021.

In the short-term, however, some traders are cautious in entering leveraged positions. A pseudonymous trader known as “TheBoot” said the ideal scenario is to wait for Bitcoin to consolidate at $25,000 or enter after the next price upsurge. The trader explained:

“No rush to enter leveraged trades on $btc right here imo. Best would be to wait and long low 25k or even mid 24k. Alternatively, wait for the next leg up and then a dip from there.”

Cointelegraph previously reported that whales have been buying Bitcoin more aggressively since Christmas, which could buoy the mid-term bull case for BTC entering into 2021.