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Price Analysis (31 December): A Stable Position for Bitcoin Around $47,000 At the End of 2021

Bitcoin / US Dollar – General Overview

 

The price didn’t manage to make a positive return in the previous days, sustaining the $47,000 level and leading the market into more consolidating moves, that will fuel the next steps in the Bitcoin market. As we have mentioned in previous articles, the $47,000 support zone was created in February 2021, when Tesla announced that it would buy $1.5 billion in Bitcoin, to keep them in its balance sheet.

 

This decision and the purchase itself created enough market depth to absorb any future corrections or steep crises. This market depth can be reversed if there is another move of the same impact but probably on the negative side. The previous bearish move was a short-term one and quickly recovered above the $47,000 line, after a couple of months.

 

The expectations are moving towards three sides. The first side indicates that the market will rebound with New Year’s Eve and the price will skyrocket as a reaction to the sudden correction, proving that the support level remains strong enough. The rebound will be around $50,000, as a small proof that the market will be brought again in the bullish path.

 

The negative scenario for the new year’s entrance will bring a break in the current support level and drop the price in the lower support zone, around $44,000. This zone was formed in August and September 2021, when Bitcoin was trying to establish another bullish trend and used the $44,000 line as its main support level.

 

The most probable scenario will be a consolidating move around this price level until there is a fundamental change that will shape the price in the next period. Waiting is always an indicator that brings more investors in the trend-line, aligning them with the next trend.

 

From a macro perspective, we can say that on New Year’s Eve 2020, Bitcoin’s price remained around $29,000, delivering new all-time high levels to all investors that have entered the market during 2020. Seeing it from now, the overall return accumulates near 55 % while the all-2021 higher return accumulates to 100 % in less than a year. Those numbers teach us that we should always hold some positions for the long-term, without even touching them, and let them win returns for our portfolio.

 

The moving averages remain close to each other and they may create another signal, for a bearish outlook this time. We should note here that during consolidation or stable periods, the moving averages are crossing each other multiple times, creating fake signals that could mislead investors to take bullish or bearish positions.

 

The trading volumes made a minor spike during the last days, a typical phenomenon when the price touches a support level. This means that bullish and bearish investors are “fighting” as some investors are trying to short-sell the situation and some others are trying to buy more coins as they believe that the support level will hold and there would be a rebound in the market.

 

Short-Term View

 

In the short-term period, we can see that the intra-day moves shaped the current situation rather than small moves in the same direction. This means that the market has rebalanced itself towards the psychological aspect of price formation. The price formation process usually consists of smaller moves that shape the large picture, which delivers the general trend view.

 

Probably, we should wait for the next year (wink wink) to see how the next trend will be established and bring a clear view about what will happen in the Bitcoin market. The only sure thing is that from year to year, we see only positive returns YoY, showing us that holding assets remains a solid strategy for Bitcoin.

 

Day-Trading View

 

In the day-trading view, we can observe that the market had 3 multiple signals from the moving averages that lead to a bearish trend. Even though only the 3rd signal was correct, we believe that with proper risk management, and stop-loss commands, we could exploit this pattern.

 

As the market has passed from a ranging period to a consolidation period, there are not many things that we can do. Day-trading usually requires more and more volatility that can help traders to gain margins either from upside or downside moves. In a consolidation period, volatility is relatively low and we can’t expect many things until there is another move that will bring the market in a new trend.

 

Indicators

 

MACD index is slowly returning in the zero line, predicting that the momentum will be eliminated from the market and the price stability will become the main trend for the upcoming days. When the market is stable, the MACD index can’t show us many things and we should examine more indexes to find out what the next move will be.

 

The RSI index moved around value = 40, which means that the price will remain stable for the next days but there is a negative outlook in the next moves. The cross between RSI and SMA will become a reality again, showing that the previous signal might be fake and didn’t result in any new trend, on the bullish end, as predicted from the signal.

 

Conclusion

 

Bitcoin is letting 2021 pass with more stability than expected. The remaining around $47,000 is a safe choice as the support level has enough market depth to absorb any minor actions on the bullish or bearish side.

 

We expect that the new year and the new week will bring us with a new trend that will be determined also from fundamental reasons or from factors that derive from the traditional markets.

 

Wishing all a Happy and Prosperous 2022, to you and your families !!!

George Foroglou

George Foroglou

George Foroglou heard first time about Bitcoin in a Christmas dinner in December 2013. As Finance student, he published articles regarding Bitcoin adoption, blockchain applications and IoT monetization strategies. From 2017, he is an active trader in the Bitcoin and other altcoins market, using mostly Technical Analysis. He has worked for plenty web portals, giving insightful articles about technical and fundamental analysis.

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