Bitcoin
Bitcoin price can hit $25K before 2021 if this key support level holds
Bitcoin (BTC) price has seen a massive rally in previous months, accelerating from $10,000 to a recent all-time high of around $23,700. This is a rally of 135% in just a matter of a few months.
It’s speculative to discuss where the price of Bitcoin could run from here. However, certain levels must be held for this rally to continue. Additionally, several indicators can be useful for analyzing the charts and anticipating potential areas of interest in price discovery.
Continuation is likely to $25,800 if this level holds
The daily chart for Bitcoin shows a massive breakout above $19,500. This rally led to a temporary top of $23,500 but automatically turned the $19,500 level into a critical level to hold.
The chart also shows a clear support/resistance flip of the $16,000 level, triggering further upwards pressure leading to the breakout. Based on the daily timeframe, the recent higher low is made around $17,500. As long as Bitcoin sustains above that level, the uptrend is intact and continuation is likely.
The Fibonacci extension tool is useful to define the potential short-term top of the rally. The first Fibonacci level is the 1.618 Fibonacci extension at $22,100, which has been surpassed. This means that the market is currently seeing an immense amount of buy pressure.
The next level of interest is found at $25,800, the 2.618 Fibonacci level, which could be the next marker for a potential top.
Such vertical rallies aren’t sustainable for long. Thus, a correction will occur at some point. However, predicting when it happens is anyone’s guess as Bitcoin may easily run to $30,000 and then see a 30% correction.
Total market cap continues to climb
The total market capitalization of cryptocurrency shows a massive upward breakout in the previous months, largely fueled by Bitcoin hitting its new all-time highs.
Following BTC’s footsteps, the total market cap is now approaching the final hurdle before going into price discovery.
Just like Bitcoin, there are important levels to watch for a potential correction. The first is found around $550 billion, which could serve as support for the pullback. If that doesn’t hold, the next levels are $435-$445 billion and $380 billion.
Are altcoins finally starting to run?
Historically, Bitcoin dominance tops out in December, after which a strong quarter starts for altcoins.
To have such a strong quarter for altcoins, Bitcoin has to correct and stabilize, as that’s the best nature for altcoins to act in. Therefore, as history shows us, the next quarter could be a significant quarter for altcoins.
Bitcoin short-term outlook
The weekly Bitcoin chart shows a massive vertical run in the previous months, which frequently ends in a violent correction just like three years ago.
As stated already, nobody knows when this big pullback will occur. Bitcoin may continue running to $30,000 before it starts to correct. However, the primary level to watch in this correction is the region around $18,500, as the chart shows.
As long as that level holds, both Bitcoin and other cryptocurrencies will likely keep climbing with the total crypto market cap going into price discovery just like BTC.
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 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
A downside correction in the Bitcoin market at the beginning of this week may prepare a fresh run-up towards $30,000, says Teddy Cleps.
The independent market analyst tweeted a technically bullish set up on Monday, projecting the Bitcoin price in a trend continuation pattern. In the chart, traders can observe the cryptocurrency consolidating inside a Triangle-like structure following its parabolic upside move above $28,000 on Sunday.
Bitcoin bull run setup, as presented by Teddy Cleps. Source: BTCUSD on TradingView.com
It appears like a potential Bullish Pennant, which could technically send the Bitcoin price higher by as much as the rally that preceded its formation — aka “flagpole.” It is around $3,652 long, as measured by Bitcoinist. Therefore, the bitcoin price has a great potential of hitting $30,000 should it break the Pennant to the upside from its apex.
“The rejection from $28,000 was just telling us where the next triangle started,” said Mr. Cleps. “Let it consolidate, let it reach an apex, let it break out, and then show us the way to $30,000.”
Fundamentals
The bullish analogy surfaced as Bitcoin achieves one record high after another. The cryptocurrency reached a new one of $28,387 on Sunday as traditional markets remained close for the Christmas holiday. Meanwhile, the aggregated open interest of Bitcoin Futures hit another record level of $8.9 billion, further reflecting the market’s enthusiasm.
Bitcoin Futures aggregated open interest across all exchanges. Source: Skew
Robbie Liu, a researcher at OKEx cryptocurrency exchange, noted that Bitcoin expects to sustain its profits on booming institutional adoption. Typically, the leading crypto corrects lower after a rally as traders’ focus shifts on its rivals, causing a so-called “altcoin rally,” which is no longer the case.
Mr. Liu referred to Donald Trump’s decision to sign a bill that would pave the way for a $900 billion stimulus package to reach millions of Americans. Coupled with the Federal Reserve’s dovish policies, it would increase further downside pressure on the US dollar. The greenback is already down by more than 12 percent YTD.
“The three major U.S. stock indexes rose for the second day in a row before the Christmas holiday,” said Mr. Liu. “Meanwhile, stock index futures saw gains today after President Trump signed a new $900 billion stimulus package, and we can expect some of that sentiment to boost Bitcoin.”
Warnings for Bitcoin Bulls
As the bullish euphoria sustains, some analysts have also suggested traders prepare for a short-term downside correction — that could invalidate the Bullish Pennant setup above.
Mark Principato, the executive director at Green Bridge Investing, stated that Bitcoin’s current upside moves “are a sign of speculative froth and the herd mentality.” The analyst stated that the cryptocurrency could still fall towards $23,000, where traders can consider opening a long position.
“Please understand, when the market looks its best, that is often the WORST time to enter,” he explained. “Avoid the hype and all of the “logic” and reasoning as to WHY this move is taking place. It will not enforce good habits in the long run.”
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