Bitcoin
Bitcoin price suddenly regains bullish momentum with $20K in sight
Bitcoin (BTC) remains in the spotlight after MassMutual became the latest company to allocate $100 million of its portfolio into Bitcoin. This is adding to the impressive buy pressure at the moment, renewing hopes of Bitcoin breaking $20,000 in December.
While a correction occurred in the past week, Bitcoin’s price bounced above the crucial level at $18,600 and is now targeting new all-time highs. However, since the breakout occurred during the weekend, one concern for the bulls is the relatively low volume of the bounce during the weekend.
Bitcoin breaks above $18,600, back into the range
The 4-hour chart tells everything about the recent move of Bitcoin. Initially, Bitcoin’s price fell through the crucial support zone at $18,500 and dropped towards the next support at $17,600.
This support zone held as support, resulting in a bullish divergence. Similarly, the bears couldn’t force a breakdown below $17,600 with buyers stepping in at this level.
From there, the crucial resistance was $18,500, which was quickly broken in several hours. This move also saw a substantial rally toward the all-time high resistance zone at $19,500.
Will Bitcoin copy previous movements again?
This outlook gives an insight into the buildup of ranges after an impulse move to the upside. Bitcoin’s price has seen several during the year. The first impulse move occurred before the halving, the second one in August, and the last one over the past few months.
However, every time such an impulse move occurs, a range is constructed as markets need to generate strength to continue the momentum. Nothing goes up in a straight line, and tests of previous resistance levels have to occur to continue the momentum.
A rising wedge was established with a fake breakout above its recent high in every of the previous range constructions. The likelihood of this happening again is increasing given the current low-volume weekend move.
From that perspective, a move towards $21,000 is back on the table, which should immediately see the $19,500 area flip for support. If that doesn’t happen, history will repeat itself, and Bitcoin most likely falls back into the range. Therefore, the levels to watch are $14,000 and $16,000 for higher timeframe support zones.
CME futures closed at $18,115 on Friday
The gaps in the CME futures chart have been the focus of many discussions and remain an important variable to keep an eye on.
A new CME gap will be created as the recent closing price is $18,115. As such, this futures gap will likely become a significant point for entry or exit, which is why such gaps frequently become a self-fulfilling prophecy and get filled.
There are two open CME gaps from recent price action. The first one didn’t fill completely as there’s still open air at $17,015. The second one at $18,115 will be created due to the weekends’ bullish price action.
Crucial levels to watch for volatility
The crucial levels are easy to spot, as the chart shows. The resistance zone to break is $19,400-19,600. This is the all-time high resistance zone and the final one before BTC/USD goes into price discovery.
However, a breakout doesn’t guarantee continuation. The resistance area must first flip for support for the rally to continue. Otherwise, a fakeout becomes the likely scenario as described in this article.
On the downside, the $18,500-18,600 area has to hold to set the stage for testing new all-time highs. If that fails, the possible retests of $16,00 and even $14,000 remain on the table.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
- Bitcoin has seen some mixed price action as of late, with bulls being unable to take control of its trend in the time following its rally up to $28,500
- The rejection here was quite intense, and it has yet to show any signs of strength in the time following this occurrence
- The fact that bulls have guarded against any deeper drawback is positive because it invalidates the possibility that this recent high is a blow-off top
- One trader is now noting that there is an incredibly bullish indicator that is flashing for Bitcoin
- He points to the cryptocurrency’s monthly RSI, noting that a monthly close above a specific level that it is nearing is historically followed by parabolic moves higher
- In the past, these movements have had an average return of 1,010%, but their size and length seem to diminish with time
Bitcoin and the entire crypto market have declined over the past 12 hours, which appears to be the direct result of the pressure that XRP is placing on the market due to its latest selloff.
Where the market trends in the mid-term likely won’t depend on XRP, which means that this latest round of selling pressure may mark a knee-jerk reaction from investors.
One analyst is noting that Bitcoin’s monthly RSI is flashing an incredibly bullish sign for where BTC trends next.
Bitcoin Struggles to Gain Momentum Following $28,500 Rejection
At the time of writing, Bitcoin is trading down just over 1% at its current price of $26,700.
The crypto has been trading between the upper-$26,000 region and the lower-$27,000 region throughout the past few days.
It has yet to garner enough buy-side support to break above the heavy resistance laced throughout the lower-$28,000 region. For now, this peak could mark a blow-off top.
Indicator Suggests BTC is About to Go Parabolic
One trader explained in a recent tweet that Bitcoin could be on the cusp of seeing a parabolic move higher in the days and weeks ahead.
He points to the cryptocurrency’s monthly RSI as an indicator for this possibility.
“BTC – Monthly RSI. 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.”
Image Courtesy of il Capo of Crypto. Source: BTCUSD on TradingView.
The coming few days should shed light on Bitcoin’s trend, as continued weakness could confirm $28,500 as a local high and lead to a deeper retrace.
Featured image from Unsplash. Charts from TradingView.
Bitcoin has had an explosive breakout year as a maturing financial asset,. The cryptocurrency is finally being considered by institutional investors for the first time, during a year that will go down in history for unprecedented money printing.
The asset’s hardcoded digital scarcity is a primary driver of its boom and bust cycles, and in the year following each block reward halving, magic happens. With the new year right around the corner, here’s a look back at past crypto market cycles for a glimpse at what to expect from Bitcoin in 2021.
Looking Back At Historical Bitcoin Market Cycles
All markets are cyclical and go through distinct phases of bear and bull trends. These cycles can take place over the course of decades, or a handful of years. In crypto, cycles often move faster than traditional assets due to the always-on, 24/7 market.
But because Bitcoin is just over a decade old, there are only a couple of boom and bust cycles at which to glean any useable data. In technical terms, when Bitcoin breaks its former all-time high, the new bull market is on.
Fundamentally, this occurs every four years following the asset’s block reward halving. This built-in mechanism slashes the supply of BTC in half at a time when demand is beginning to resume.
RELATED READING | NY TIMES BESTSELLING AUTHOR: BITCOIN S2F IS FLAWED, NOT MATHEMATICALLY SOUND
The combined effect of suddenly diminished supply and growing demand throws buying and selling equilibrium so out of balance that price appreciates exponentially.
2020 has acted as the ideal example of the impact each halving can have on the market. Bitcoin went from “a fad” to full-blown FOMO in less than nine months, all because supply and demand is so favorable to positive ROI.
And while 2020 was definitely a breakout year for a bullish Bitcoin, it is next year that will make a new wave of Bitcoin billionaires.
Halving years are marked in blue. In the year following, the cryptocurrency goes full parabolic | Source: BLX on TradingView.com
Move Over 2020, Why 2021 Will Be The Cryptocurrency’s Best Year Yet
Glancing at the chart above and it’s shocking to see just how high Bitcoin has climbed in twelve years. During the twelve years of trading, the cryptocurrency has had three distinct halvings, cutting the reward miners receive from 50 to 25 BTC, then from 25 to 12.5 BTC, to the current 6.25 BTC.
Each time this happens, demand begins to so drastically outweigh the limited supply, the asset goes parabolic and rises exponentially.
RELATED READING | BITCOIN BULL RUN IS OFFICIAL ACCORDING TO MONTHLY RSI, MORE BULLISH THAN 2017
In the two post-halving years on record, the first resulted in well over 6,000% ROI and the second just under 2,000% ROI. What could 2021 bring crypto investors?
Another 2,000-6,000% return isn’t likely simply due to the law of diminishing returns, however, even a 400% increase from current levels would result in a price of $125,000 per BTC.
Featured image from Deposit Photos, Charts from TradingView.com
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