Year End Countdown: 5 Things To See About Bitcoin This Week
Bitcoin started the week near $ 51,000 as the end of 2021 approached and traders slowly step into the holiday season.
After Christmas, Bitcoin continued trading. Last year the crypto king rose from $ 29,000 to $ 69,000 and then fell again.
The majority of attendees argued that the height of the recession should have brought the market to $ 100,000 and beyond by the end of December. Instead, after falling to $ 41,800, the price slowly moved through the areas ending a year after halving full of surprises.
With mixed emotions characteristic of the end of the fourth quarter, the article will take a look at what could shape BTC price action in the remaining days of 2021.
Bitcoin in less time: “Do it gently”
Despite concerns that thin liquidity could lead to volatility in spot prices during the Christmas season, reality so far has shown the opposite: Bitcoin is quiet and even too quiet.
Price volatility was somewhat unusual over the weekend, with a rapid dip below $ 50,000 followed by a return on the upside.
Data from TradingView shows that at the time of writing, the spotlight is back at $ 51,000, with price action largely unchanged.
BTC / USD 4-Hour Price Chart | Source: TradingView
For popular trader Pentoshi, this is a reason to wait for the more important $ 53,000 zone to return before taking action. Brothers tweets On Sunday:
“I’m still looking at $ 49,200 and am ranking between $ 53 and $ 55,000 on the current charts (disputed areas).”
He noted the “clean” nature of BTC in the weekly timeframe, where the price is just above the middle of a multi-month range with $ 58,000 as the upper limit and $ 32,000 as the lower limit.
Brothers to speak added in the comments that $ 58,000 could be the “definition point” for Chartists in 2022.
The co-founder of the Decentrader Filbfilb exchange is meanwhile cautious in the short term. Despite many bullish signals on Christmas Day, he warns that current levels are like a bull trap.
For him, the 50-day moving average, which is currently at $ 54,700, will be a bullish trigger for the new year.
Stock-to-flow keep fighting for another year
Though it may face a barrage of criticism, stock-to-flow Bitcoin pricing models and their creator PlanB refuse to give up.
Follow the following account S2F multiple, BTC should be trading above $ 97,000 this week, but reality has different ideas.
With ATH’s recent decline, Bitcoin is questioning the possibility of a pattern chain that has never been debunked before.
This has been controversial – stock-to-flow uses two standard deviation bands around an important trajectory to track price, and Bitcoin is currently in between. While there is no point in invalidating the pattern, many believe the pattern’s acceptable price range is too large.
These will be tightened if PlanB says it will ditch the models if BTC doesn’t trade at $ 100,000 by the end of 2021.
“Just to be clear, I have no doubt that Bitcoin S2FX is right and Bitcoin will hit $ 100,000 to $ 288,000 by December 2021,” he wrote in a comment section in early November.
He later withdrew these statements, emphasize that the standard deviation bands can cause technical invalidations. As a result, both stock-to-flow (S2F) and cross-asset stock-to-flow (S2FX) continue to work.
“Try to believe that a model that was within a standard deviation of 3 years has failed. Bitcoin is in the same position when I released the S2F model in March 2019: at the lower end of the 1st band. ”
Bitcoin stock-to-flow diagram from December 27th | Source: Buy Bitcoin Worldwide
S2F suggests an average price of $ 100,000 for Bitcoin during this halving, while S2FX is up to $ 288,000.
PlanB’s floor model has been accurate throughout Bitcoin’s history, but for the first time it does not accurately track the November closing price.
Pay attention to the OI. bomb
Bitcoin’s spot price action can be a headache for anyone due to the thin Christmas trading volume, but one important area to be aware of is derivatives.
After the liquidation earlier this month, the dates are shows The Open Interest (OI) of Bitcoin futures has risen again. This is remarkable in and of itself, but when Open Open Interest is combined with falling prices, it’s a difficult time, as Filbfilb warns.
However, he explains that the relationship between price movements and open interest is not a simple one, but “saves” traders’ positions in volatile phases.
Meanwhile, concerns about excessive leverage in the derivatives markets were allied as the price fell to $ 42,000.
Although leverage has since returned, the funding rate was neutral when the price was at $ 50,000. This is a clear change compared to a few weeks ago and there is growing confidence that a sustainable upward trend can now continue.
Meanwhile, on-chain indicators that determine the behavior of buyers and sellers are also showing signs of possible change.
“The main thing I keep in mind is when both net profit and loss are low. Please tell me that if buyers step in, sellers are likely exhausted and there is potential for further price movement, ”On-Chain College Twitter account notice Sunday highlighting data from on-chain analytics firm Glassnode.
Bitcoin Net Real Profit / Loss Chart | Source: On-Chain College
The cautious liquidity sentiment radiated into the macro market
The macro markets present a variety of common vacation risk problems, but due to the lower liquidity they also have the potential to cause above-average movements.
Therefore, the prediction for the coming days is that “news that will trigger ugly intraday movements due to reduced holiday liquidity or volatility will remain so flat that doctors and nurses would scream on an electrocardiogram emergency,” Bloomberg quoted Jeffrey Halley as saying. Senior Market Analyst at Forex Brokerage Oanda.
Such news could revolve around COVID-19 or China, with Asian stocks falling on Monday and European indices trying to peak when it opens.
US stocks hit ATH before the Christmas break, crowning a pivotal year with the S&P 500 breaking 68 new records.
However, the US dollar has yet to rebound from its previous intense uptrend as the US dollar currency index (DXY) declines towards the end of the year. This could at least give Bitcoin traders some breathing space if stocks benefit too.
DXY remains close to its highest level since June 2020.
1 week DXY chart | Source: TradingView
Bitcoin often falls at the least anticipated time
BTC traders are getting more and more anxious as 2021 comes to an end.
According to the Crypto Fear & Greed Index (a popular sentiment meter based on a number of variables that show a trader’s overall thinking), even if prices are trading above $ 50,000, the market is still far from safe.
The index stands at 40/100 on Monday, suggesting “fear” sentiment after peaking at 45/100 last week.
Cryptocurrency Fear and Greed Index | The source: Alternative.me
Since the onset of the turbulence, the index has proven to be particularly sensitive to even minor price movements.
Thus, even a slight shake can trigger a variety of emotional trading responses, and a price event can create a bullish or bearish snowball effect.
Under normal circumstances, however, mass surrender occurs only during periods of “extreme greed” when the index measures 90/100 or higher.
Meanwhile, Blockstream’s chief strategy officer, Samson Mow, took on an optimistic tone, arguing that most market participants are being overly pessimistic this Christmas.
“Bitcoin often falls at the least expected time.”
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