Bitcoin Analysis for 15/01/2021
Today, the price of bitcoin continued its upwards trajectory, adding an extra 10% to yesterday’s gains.
Last weekend, bitcoin reached a new all-time high of $42,000, but then it crashed by nearly 30% soon after, finding a low at $30,000 on Tuesday, according to CoinGecko.
Essentially, BTC/USD lost $10,000 in less than two days. Since Wednesday, the price of bitcoin recouped over 20%, showing buyers are back in control. At the time of this writing, bitcoin was trading at $39,900. Since yesterday, daily volume has remained flat, at around $60 billion.
As we predicted yesterday, the price of bitcoin continued its pump, but it remained within the blue trading range. Not only that, but BTC/USD also moved close to the top at $40,100, above the $40,000 mark, as we expected.
We were also correct in guessing that the price would continue to move back up. Today, despite the substantial move to the upside, the Financial Times released some worrisome news, reporting:
“ECB president Christine Lagarde said at a conference on Wednesday that bitcoin was ‘a highly speculative asset, which has conducted some funny business and some interesting and totally reprehensible money laundering activity.’”
Interestingly, Lagard herself, during her time as head of the IMF, was found guilty of criminal charges over a “massive government payout,” according to the Independent.
To conclude our introduction, we think that the horde of new sellers that came into the market once bitcoin crossed the $40,000 mark has now left. New buyers should soon push the price above $50,000, perhaps during the weekend.
For now, we think BTC/USD might have a few bounces near $40,000 before breaking this resistance point. Afterward, it’s clear skies until we reach $45,000.
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 Joseph Young, whose Twitter profile describes him as an analyst focusing on finance and cryptocurrency, as well as a contributor to Forbes and Cointelegraph. He currently has over 100,000 Twitter followers.
In his post, Young shares the weekly chart of BTCUSD Perpetual. As the analyst highlights, “The Bitcoin weekly candle has turned green.”
This is a rather spectacular feat, as the price of bitcoin has dropped 30% since Sunday, but also because institutions and smart money tend to look at longer time-frames, such as daily, weekly, or monthly time frames.
Therefore, the fact the price has just turned bullish again is a sign buyers are back in control, which could mean a serious uprise for BTC/USD, above previous highs.
The next update comes from Joe Weisenthal, whose Twitter describes him as being an editor, as well as the co-host of the Odd Lots podcast and 'What'd You Miss?' on Bloomberg TV.
Like Young wrote above, Weisenthal notes that the price of bitcoin had already recouped most of its losses from earlier in the month.
Weisenthal shares a chart that shows BTC/USD since June, and the trend does not lie: bitcoin has been in an uproar as the price grew from around $10,000 to about $42,000—representing a 320% increase.
Do you remember the old saying among traders that “the trend is your friend, until the end?” Why should investors and traders move against such a bullish trend when, as we discussed yesterday and the day before, bitcoin’s price history usually drops between 20% to 30% during bull runs?
We believe bitcoin hodlers can benefit from taking these opportunities to accumulate more bitcoin instead of selling. As we’ll discuss next, there’s plenty of room for BTC/USD to grow.
To help us understand the future price action of bitcoin, we’ve picked up the following tweet by Preston Pysh, co-founder of The Investor’s Podcast Network.
This post adds to the previous two, as Pysh shares a chart of bitcoin since 2012, showing how the price moves according to a four-year cycle. Not only that, but notice the blue area, which the analyst highlighted. Even though bitcoin grew north of 4440%, it had significant 30% price dumps along the way.
In the tweet, Pysh also wrote how Wall Street seems to have forgotten to adjust its position size according to the Sharpe Ratio logic. Investopedia clarifies that:
“The Sharpe ratio (...) is used to help investors understand the return of an investment compared to its risk. The ratio is the average return earned in excess of the risk-free rate per unit of volatility or total risk. Volatility is a measure of the price fluctuations of an asset or portfolio.”
This concept is well explained by Pysh in his post, who gives a straightforward example of the magnitude of the opportunity cost for not buying and holding bitcoin for four years. As he wrote:
“Any 4 year period, 2% BTC exposure & 98% cash would exceed 100% exposure in the S&P but w/ min vol. ”
The last tweet of the day comes from Mati Greenspan, one of our favourite analysts, founder of the cryptocurrency research firm Quantum Economics, as well as a trader, investor, and licensed portfolio manager.
In his post, Greenspan shares an excellent chart of the correlation between bitcoin and the U.S. dollar. He writes that “the correlation between bitcoin and the USD is now -0.15, its lowest reading in history.”
This is extremely bullish news. The fact that bitcoin is not correlated whatsoever (no positive or negative correlation) with the U.S. dollar is an indicator that the cryptocurrency is gaining serious strength against the greenback.
If the trend continues, this means the BTC/USD should move even higher.
Bitcoin Price Prediction
This week, bitcoin had an epic surge of more than 7%, after losing nearly 30%, according to CoinGecko. Since Wednesday, the price of bitcoin started a new uptrend and is currently trading above $39,000.
In the past 24 hours, bitcoin’s price rose to nearly $40,000, according to CoinGecko. Yesterday, we predicted the price of bitcoin would continue to travel toward higher price ranges.
That’s precisely what happened. Not only that, but our educated guess that the price would surpass the $35,000 mark was a bullseye.
Therefore, we think BTC/USD will continue its move toward $45,000 during the next trading day.
Adding to that, we don’t see a reason why bitcoin couldn’t go above $50,000 by the time the weekend is over.
It is our view that this recent dip has attracted a significant number of new buyers, which should include smart money. As we discussed earlier, the short-term price of bitcoin is now moving back up, and most investors and traders expect a continuation of the bull cycle.
How do we think the price will trade today? As shown in the above chart, we think that bitcoin will find a top around $50,000. To find this level we drew the Fibonacci Retracement lines from the most recent top to this year’s bottom near $30,000.
The indicator shows two potential resistance levels: first around $43,000 and then just under $50,000. We think BTC/USD will easily break the first resistance target, but we doubt it will break the second.
On the other hand, we don’t expect the digital currency to drop much below $34,000 due to the sheer number of buy orders placed above $30,000.
To finalize, the Volume Profile Visible Range (VPVR) shows a high number of buy orders between $31,000 and $37,000, and then again between $27,000 and $29,000, which means BTC/USD should not go below $30,000, even if things deteriorate significantly.
As a reminder, we believe BTC/USD will find a new high near the $50,000 price range in the next few days.
Posted Using LeoFinance Beta