Bitcoin Analysis for 01/03/2021
During the weekend, bitcoin's price continued to drop as we expected. In the past 24 hours, bitcoin declined over 6%, and it was trading around $44,500 at the time of this writing, according to CoinGecko.
We think there will be a few more days of bearishness before the sun comes out again and BTC/USD starts to recover.
The current pattern is quite similar to the price drop from $40,00 in mid-January 2021.
Still, we are quite hopeful about bitcoin's long-term price, especially with recent exciting news.0
Today, the BBC reported some exciting news about bitcoin's impact in Nigeria, writing
that
"Estimates show that of the top 10 countries for trading volumes, Nigeria ranked third place after the US and Russia in 2020, generating more than $400m worth of transactions."
While some people criticize bitcoin for its stateless nature, we believe that this aspect is the real power of cryptocurrency. It gives people an alternative to fiat currencies, which have been printed with significant volume in recent years, especially in response to the global pandemic. Bitcoin, in contrast, has a hard cap on total supply, and individuals can choose to use it instead of their country’s fiat currency.
We think that bitcoin’s recent downward trend may persist in the short term, perhaps until the price goes near, or even below, its 20-day MMA, close to $41,000.
Adding to the above, notice how bitcoin's price almost touched the predicted range's bottom (blue). However, while BTC/USD does not reach this critical price range, we think selling pressure will persist.
In sum, we think today or tomorrow the price will plummet toward $41,000. Soon after, we expect bitcoin's price to rise again, and start a new bull run toward $60,000 and above.
As a reminder, we are confident that BTC/USD will reverse its downtrend soon and the long-term uptrend to resume right after. We remain bullish on BTC/USD as long as:
- BTC/USD remains above its 20-day MMA (red), 50-day MMA (green), and 200-day MMA (blue).
- BTC/USD doesn't drop below $40,000.
- BTC/USD daily volume goes above its 21-day Moving Average soon.
What Do Traders Think?
This week's first tweet comes from Rekt Capital, whose Twitter profile describes him as a cryptocurrency trader and analyst, as well as the author of the Rekt Capital Newsletter.
The analyst writes that
"In 2017, the average #btc Bull Market correction took 19 days. This most recent pullback has been going on for only 7 days."
Rekt Capital notes that the average duration for a pullback in 2017 was 19 days and points out that the price could still go lower since the current correction has only been going on for a week.
Adding to the above, we agree with Rekt Capital's analysis, and we think there is a strong chance bitcoin's price drops to $40,000. If we look at last week's chart, we notice how the price keeps putting lower highs and lower lows. That is a bearish sign, and it could mean BTC/USD will continue to drop for the time being.
The next post comes from Ki Young Ju, CEO of Crypto Quant.
In his post, Ju shares the
“BTC: All Miners Outflow” chart that shows the “total amount of BTC transferred from all miners’ wallets.”
The analyst highlights that the ongoing price battle is taking place between 1) institutional investors and whales and 2) miners.
While the first group is clearly buying hefty sums of bitcoin, miners are selling coins. Why? Our guess is that miners need to sell bitcoin to maintain their operations.
Additionally, we also notice that the outflow from miners’ wallets is diminishing, which could mean less selling pressure on bitcoin prices.
Hence, this correction could be close to an end.
The next tweet comes from CryptoBull, a bitcoin trader with nearly 180,000 Twitter followers.
CryptoBull shares a vital statistic regarding the value of bitcoin. Essentially, even though the number of bitcoin left to mine decreases every four years—an event known as “the halving”—the total value of the remaining coins is growing exponentially.
According to Investopedia, the halving “is when the reward for mining Bitcoin transactions is cut in half.
In February 2011, the total value of the coins left to mine was about $20 million.
Then, in February 2016, half of the amount from 2011 was worth $2.5 billion. In February 2021, half of the amount of 2016 was worth $120 billion.
Hence, even though there is less bitcoin available to be mined, every four years, the amount of bitcoin remaining is worth more.
This is a fantastic data point, as it shows that the value of bitcoin is growing as expected due to the limited supply and increasing demand.
The last post of the day comes from The Crypto Dog, whose Twitter describes him as a bitcoin trader and miner since 2011. At the time of this writing, this market observer had over 300,000 Twitter followers.
In his tweet, The Crypto Dog shares a chart of bitcoin's price since late 2020.
He writes,
"I'm fairly confident Bitcoin will be $60k+ in May and on the way to $100k+ by the end of the summer."
We fully agree with his analysis. Not only do we believe bitcoin continues to be on target to hit $100,000 sometime during 2021, but we also think that the long-term bullish trend remains intact.
Adding to that, as we wrote above, we think there's still room for another significant 10% drop before bitcoin's price fully recovers and starts a new run toward $60,000.
Bitcoin Price Prediction
During the weekend, bitcoin's price had a substantial 6% drop, after losing around 20% during the previous week. At the time of this writing, BTC/USD was trading around $44,500.
For now, we don't see a price reversal on the horizon, and we think the drop will only get steeper.
We believe during the weekend, BTC/USD will fall further toward the 20-day MMA.
Perhaps next week, we'll see a reversal of the downtrend.
How do we think the price will trade today and throughout the week? As shown in the above chart, we believe that bitcoin could top around $50,000 if new buyers enter the space. Still, that is highly unlikely. We think that short-sellers may continue to push down bitcoin's price.
On the other hand, we don't expect the cryptocurrency to drop much below $41,000, due to the sheer number of buy orders located around this price region. Also, we doubt bitcoin moves below its 20-day Modified Moving Average (MMA).
To finalize, the Volume Profile Visible Range (VPVR) shows a high number of buy orders between $45,000 and $50,000, and then again at $41,000, which means BTC/USD should not go below $40,000, even if things go south.
As a reminder, we believe BTC/USD will most likely return to its uptrend in less than a week.
Posted Using LeoFinance Beta
