The most important part in the current situation remains the support level around $47,000. This level was established back in February 2021, when Tesla announced that it would buy $1.5 billion in Bitcoin for future investment. This purchase opened the market depth for the Bitcoin market and marked the previous periods for that.
Right now, the price remains around $46,800 – $47,000, touching the abovementioned support zone. The price is ranging between $46,000 and $48,000, creating a horizontal channel, that usually leads to a breakout either on bullish or bearish trend.
This means that the market is facing a two-way scenario regarding its short-term development.
The first scenario indicates that the support zone will hold firmly and the price will start to grow towards the higher price channel, which stands between $56,000 and $60,000. This development will open a new cycle for breaking the next horizontal channel. The bullish scenario need to be fueled from a sufficient trading volume that will enable the bulls to take over the market and lead the price to higher levels.
The bullish scenario has a small advantage on the current situation as the moving averages (50-day and 200-day) are positioned in a bearish formation and they continuously approaching each other. The moving averages are getting closer once the market is more stagnated and they can create signals if the situation remains stable for now. This means a bullish signal might appear if the market continues to range at those levels.
The second scenario will be a breakdown to lower levels, starting from the $44,000 support level that became evident in the previous ranging period in August and September 2021. This breakdown could lead even in the bearish situation, which stand between $30,000 and $40,000 last summer.
The two scenarios can be brought in reality taken into consideration some fundamental elements. This week, Bitcoin surpassed the barrier of 18 million mined tokens, meaning that every day Bitcoin is becoming more and more scarce. This scarcity is always a bullish advantage and we heard that more institutional investors are becoming positive to test the field, highlighting Microstrategy who bought more bitcoins during this correction, increasing its portfolio to 121,044 bitcoins in total.
The trading volumes in the market are making some spikes during the sell-off days but they remain at normal levels, without any exaggerating moves during the last week.
The last 2 weeks has been a stale condition for the Bitcoin market as the price has entered a parallel channel, with a descending angle. The price action has a certain bottom around $47,000 and a local high level around $49,000 – $50,000. This price ranging will probably breakout will have an immediate result as in the majority of cases, a new trend is emerging for the next cycle.
As we have seen from the previous price channels, those consolidations don’t last more than 20 days. As we are now in the 22nd day of the consolidation period, we expect that the market will take a new route this week. The bulls are always on track to buy more bitcoins and establish an end-year rally (which is a common scenario in the traditional stock markets).
The end-year rally is a common phenomenon in stock markets as large companies are trying to sell assets and decrease their overall balance sheet for tax reasons. Selling assets from big corporates usually drop the valuations and make investors to put money on mid and small cap stocks or alternative assets. As Bitcoin and other cryptos are categorized as alternative investments, we could expect a similar evolution according to the global markets.
In the 4-hour span, we can observe that the market is producing constantly buy and sell signals, delivering several opportunities for day-traders to explore them. The ranging period is usually a profitable season for short-term traders and day-traders as they can “ride” the volatility wave and make some quick profits.
For example, all the buying signals went profitable in terms of 8 – 12 hours and all the selling signals went profitable (except the one in 13 December). The selling signals produced more profits for the short-sellers as the market went on larger correction when there was a trial to break the channel in the uptrend position.
The current position has moved towards a bullish trend as the moving averages are about to cross each other and deliver a new signal in the market. The new signal could bring an uptrend towards $48,500 and deliver instant profits for the next day. We would see if this pattern will confirmed once again.
MACD index passed slightly in the green field, indicating that some momentum has entered the market and its expansion could bring more joy in the markets. In a short-term perspective, the bullish perspective is the option with the more chances. If this is could a turning point, we can also consider but it will become evident in the next days.
The RSI index is ranging below the value = 40, which means that the market is still considered as an opportunity for investment, as the market has corrected enough to be ready for another uptrend in the short-term future. This opportunity has been there for the entire December but we should consider that the RSI index delivers an estimate, based on the previous two weeks and not in the long-term positioning.
This week has been more of a ranging status that will eventually lead in the next trend, bullish or bearish. Most of the technical elements are proposing a bullish uptrend, especially in the short-term positioning, with more chances to deliver value, once the price hit the bottom around $47,000.
Next goals above $50,000 will be defined when the market is ready to bring more efforts from more investors.
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