Bitcoin Analysis for 13/01/2021

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Yesterday, the price of bitcoin suffered a 20% decline as new sellers entered the market.

Since Monday, BTC/USD crashed nearly 30%, finding a low at $30,000 after losing $10,000 in less than two days. However, today, the price of bitcoin has significantly recovered.

In the past 24 hours, BTC/USD had recouped 5% after moving back upwards more than 10% since yesterday.

Last week, the price of bitcoin had a significant upside move. During the weekend, bitcoin reached a new all-time high of $42,000, according to CoinGecko.

At the time of this writing, bitcoin is trading at $34,400. Daily volume has fallen quite abruptly since yesterday, around 50%, as most sellers left the market.

As we predicted yesterday, the price of bitcoin remained within the blue trading range. We were also correct in guessing that the price would start to move back up, even though there was a minor chance for a continuation of the sell-off.

Today, Forbes came out with an excellent piece explaining the recent dip. As reported by Charles Bovaird:

“With the weekend dip below $39k, traders added to their positions, but a failure to break $40k led to cascading pullbacks.”

Essentially, t most experts point to retail investors getting spooked by a sharp decline in price, which added to the selling pressure.

To conclude our introduction, we think that last weekend’s price move that went above $40,000 attracted a horde of new sellers; however, we believe that the short-term trend has now reversed and new buyers will soon push the price above $50,000.

For now, we think BTC/USD might have a few bounces near $40,000, before breaking this resistance point.

As a reminder, we are confident BTC/USD will continue to move upward if:

• BTC/USD remains above its 20-day EMA (red), 50-day EMA (green) and 200-day EMA (blue).
• BTC/USD doesn’t drop below $35,000.
• BTC/USD daily volume goes back above its 21-day Moving Average.

What Do Traders Think?

The first tweet of the day comes from Bloqport, a crypto newsletter with over 25,000 followers on Twitter.

In his post, Bloqport shares the weekly chart of bitcoin and he adds an interesting comment that “Bitcoin surges an average of 150% after every 30% dip.”

This data shows the exact reason why we think investors and traders should take advantage of any dip during bull runs. Every time the price of bitcoin has a significant dip of over 20%, it soon rises over 100%.

As other bitcoin enthusiasts have shown, it is the whales who are currently buying the dips. To prove the previous argument, let’s use this post by Bitcoin Disciple, which shows that “From Sunday evening (left) to Tuesday morning (right), retail has been swindled out of 15,989 bitcoin by the 3 richest layers of addresses.”

Remember the catchphrase to always follow smart money? This is the reason why. While dumb money was selling their bitcoin thinking the market was going to tank, smart investors were accumulating additional bitcoin with a 10% to 20% discount rate.

The next update comes from Preston Pysh, cofounder of The Investor’s Podcast Network.

In his post, Pysh shares the nominal returns of bitcoin, the S&P 500, the Nasdaq and gold during 2021.

He highlights how even after the recent sell-off, which took the price from above $40,000 to a low near $30,000, bitcoin is still the best-performing asset.

While the SP& 500 grew by 1.8%, the Nasdaq by only 0.5% and gold even dropped -2.5%, bitcoin jumped over 20%, in the same period.

Therefore, we highlight how crucial it is for investors and traders to either buy more bitcoin at the cheap or avoid selling during these price drops. The reason is simple: bitcoin is far, far away from the current cycle top. Hence, if your goal is to accumulate as much bitcoin as possible, you should at least take advantage of these dips to grow your bitcoin portfolio.

The third post of the day comes from Holger Zschaepitz, whose Twitter profile describes him as the author of “Schulden ohne Sühne?”, a book about how states rely too much on debt.

Zschaepitz shares a chart of the boom cycles of the past 50 years, “from gold’s rally in the 1970s to Nikkei’s surge in 1980s to Nasdaq 100’s runs in the 1990s.” The chart can be found in this Bloomberg article.

As the author and the chart point out, bitcoin’s surge since 2018 has completely wiped out all other boom cycles. Essentially, bitcoin grew north of 900%, while gold and Chinese equities, the second and third contenders, grew by less than 50% of bitcoin, and peaked just above 400%.

Consider that most investors and traders believe that bitcoin is far from its current cycle top.

Hence, the above chart may still substantially change throughout the year.

Let’s dig a bit deeper in the next post.

The last tweet of the day comes from Rafael Schultze-Kraft, whose Twitter profile describes him as a data scientist, on-chain analyst, and CTO at Glassnode.

As the analyst points out in his post, several important metrics are currently at an all-time high.

Some of the most important are: “Active addresses, Active entities, Difficulty, Hash Rate, Number of whales, Illiquidity supply, Non-zero bitcoin addresses.”

Therefore, just like Schultze-Kraft points out, “The network is healthy,” which means that it makes little sense to part ways from your bitcoin unless you hope to sell it to acquire it back at a cheaper price.

As we’ve been blasting through the entire Daily Roundup, take all opportunities to increase your bitcoin holdings. Most traders regret not doing so.

Bitcoin Price Prediction

Last week, the price of bitcoin had an epic surge of more than 17%, breaking a new price record during the weekend when it traded at $42,000, according to CoinGecko. This week, BTC/USD had a significant decline of almost 30%, but the price has now started its recovery towards $40,000.

In the past 24 hours, bitcoin’s price rose to around $37,000, before correcting toward $34,400 where it currently sits, according to CoinGecko.

Yesterday, we predicted the price of bitcoin would start its short-term trend reversal towards higher price ranges. That’s precisely what happened. However, it’s too early to tell if no additional sellers will pop out of nowhere and add to the selling pressure. It’s unlikely but possible.

Therefore, we think BTC/USD will move back above $40,000 at the end of the week. It is our view that this recent dip will attract a horde of new buyers, which should include more institutional buyers. As we discussed earlier, active bitcoin addresses holding large sums of bitcoin noticed a growth, while retail addresses, holding less than 1 bitcoin had a drop.

Today, we discussed how many traders and macro analysts see the price moving in the short term.

We also compared the growth of bitcoin to other prominent markets, in 2021 and through the past 50 years. Bitcoin has outgrown all markets in both time-frames.

We hope you took advantage of this recent dip to accumulate more bitcoin.

How do we think the price will trade throughout the day? As it’s shown in the above chart, we think that bitcoin won’t go above its previous high. We think it will trade below $40,000.

On the other hand, we don’t expect the digital currency to drop below today’s low, of $32,000, due to the high number of buy orders placed between $30,000 and $35,000.

To finalize, the Volume Profile Visible Range (VPVR) shows a high number of buy orders between $28,000 and $26,200 and then again between $22,500 and $23,000, which means BTC/USD should not go below $23,000, even if things deteriorate significantly.

As a reminder, we believe that BTC/USD will soon recover and move above $40,000 until the end of the week. Nonetheless, keep in mind that the ongoing correction could still take the price of bitcoin near $30,000, even though we think that is highly unlikely.

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