During the weekend, the price of bitcoin traded within our predicted range (blue).
Saturday, BTC/USD almost touched its prior all-time high near $42,000, but sellers did not allow for the price of bitcoin to surpass its record price.
Today, the price of bitcoin had a significant decline of almost 6%. At the moment of this writing, it was trading around $38,400, according to CoinGecko. We think a retest around this price region would be necessary for the short-term price of bitcoin. As we dig deeper in the next section, if bitcoin can find support above$40,000 we should expect the price of bitcoin to skyrocket into $50,000 and above, in the next few weeks.
Therefore, we think investors and traders should expect the bull run to ensue.
Additionally, volume continues to grow even though today we noticed a significant spike in sell orders. On Saturday, the daily volume surpassed its 21-day EMA, an extremely bullish signal that buyers are entering the market in full force.
Today, some more bullish news was released at Forbes. As Billy Bambrough details,
"Scott Minerd, chief investment officer of the multi-billion dollar investment giant Guggenheim Partners, has predicted bitcoin could climb as high as $600,000 per bitcoin—a price that would make bitcoin's total value around $12 trillion."
The most important narrative for 2021, and perhaps the following years, will be the adoption of bitcoin first by financial institutions and hedge funds, but in the future, most likely by central banks themselves. Since bitcoin has a limited supply, we think this will play out as a traditional game of chairs: as long as the music keeps playing everything will go on as usual. However, once the music stops, central banks will soon realize that there are not enough chairs for all.
We think that there will be a ferocious appetite for bitcoin in the upcoming years, mostly from financial institutions and central banks.
While this type of positive news continues to be released, and more institutions and corporations join the bitcoin space, the chances are high that BTC/USD will continue to appreciate.
For now, we expect bitcoin to continue its uptrend and move toward $42,000 soon.
Currently, we are focusing on the short-term price action and hoping bitcoin finds support above $40,000.
As a reminder, we are confident that 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?
In his post, Melker shares the daily chart of BTC/USD. He adds two trendlines, one at the top and one at the bottom of the current descending channel formed during January 2021. The trader also wrote that "technically, this is a confirmed breakout that should take $BTC to 63K eventually."
To showcase his previous point, Melker added two vertical lines in the chart, that shows the previous bull-run that began in early December 2020 and his proposed next target, around $63,000.
Even though Melker's prediction is quite bullish, he adds that there is a possibility the price of bitcoin retests the current support zone (top line). If this happens and bitcoin sustains the rally, we are increasingly confident that the price will move above $50,000.
What could be driving the current price appreciation?
The next post comes from Joseph Young, whose Twitter profile describes him as an analyst and investor with more than 117,000 Twitter followers, and it adds to the previous tweet from Melker.
Essentially, Young shared a chart of the bitcoin total reserves locked at exchanges (red) and the price of bitcoin (black). We notice that as the total bitcoin sitting at exchanges drops, the price tends to rise.
The above logic is relatively simple to explain and is linked to the supply-demand law. Essentially, if there is less bitcoin available at exchanges, and demand remains equal, the price will rise since each unit's remains will become more valuable.
We are quite confident that as long as institutional demand keeps coming into the bitcoin market, the price will rise since these players will lock away most of the coins they acquire.
Just like Young wrote, there is an evident "Supply-side crisis" in the bitcoin market.
This is exceptionally bullish for bitcoin's short-term price, and the main reason we agree with Melker's analysis.
The next tweetstorm comes from Dr Saifedean Ammous (Saifedean.com), author of "The Bitcoin Standard."
In his post, Ammous shares a chart from Dollar Cost Averaging Bitcoin, a website that helps users calculate how much bitcoin they can accumulate by Dollar Cost Averaging.
According to Investopedia,
"Dollar-cost averaging (DCA) is an investment strategy in which an investor divides up the total amount to be invested across periodic purchases of a target asset to reduce the impact of volatility on the overall purchase. The purchases occur regardless of the asset's price and at regular intervals."
This means that DCA is probably the most risk-free technique for the average investor to
accumulate bitcoin since buyers are less exposed to price fluctuations because they buy on a recurrent basis.
To conclude, Ammous highlights the performance of Dollar-Cost Averaging during the past three years:
"If you had put 10% of your income over the past seven years into weekly purchases of bitcoin, you would today have a bitcoin stash worth ~33 annual salaries."
The above piece of data shows that it is possible to accumulate bitcoin without caring too much about bitcoin's price.
The last post of the day comes from ck, an account that works at Bitcoinmagazine.
What ck highlights is that more and more investors measure their portfolios in bitcoin terms, not dollar-value.
As ck highlighted:
"2017 smart crypto traders use BTC as their unit of account to price Altcoins. 2021 smart macro investors use Bitcoin as their unity of account to price their investments."
What this shows is that participants in the bitcoin market are becoming increasingly aware that it makes much more sense to measure their wins and losses in bitcoin terms, because the dollar (and all other fiat currencies) are inflationary by nature, which means that they tend to lose value, hence your portfolio performance will mostly go up.
However, by measuring gains and losses vs bitcoin, your portfolio has to surpass bitcoin's performance to beat it.
Quite a different mindset, isn't it? As ck concludes: "BTC becoming global money before our eyes."
We couldn't agree more!
Bitcoin Price Prediction
Today, bitcoin's price stalled and continued to trade around $38,300 according to CoinGecko.
Despite that, since last Monday, BTC/USD has grown by over 10%. Let's hope the bull-run continues.
Like we predicted in the previous Daily Roundup, bitcoin's price moved above $40,000 and it seems to almost have found support around this price range. The next couple of days will be critical to understanding the short-term behaviour of the BTC/USD.
As we wrote in the introduction, as long as institutional buyers pour millions of dollars into the bitcoin market, there is little chance for a price reversal. Not only that, but most analysts and traders think the $50,000 price range will be reached relatively soon, perhaps during the current month. The reason is the fact that less bitcoin is available at exchanges what usually drives the price up.
To conclude our reasoning, please notice how BTC/USD keeps notching higher lows since the first crash that took price below the 20-day EMA. This signifies that the price has fully recovered from short-sellers, and that bitcoin wants to move to higher price ranges.
How do we think the price will trade throughout the day and during the rest of the day? As shown in the above chart, we believe that bitcoin could find a top above its record price of $42,000 During the weekend sellers took advantage of the bullish price action and sold near the top.
Therefore, once sellers are exhausted, BTC/USD should start moving to much higher price ranges.
On the other hand, we don't expect the digital currency to drop much below $35,000, even if the trend suddenly reverses, since there seems to be strong support around this price range.
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 think it's still possible that BTC/USD will attain a brand-new record price of around $50,000. before February comes to an end.