During the weekend, bitcoin’s price enjoyed a substantial rally, as a significant number of buyers entered the market on Friday and pushed the price back above $33,000. Yesterday, there was a minor decline of around 4% and traded below this critical range; however, bitcoin’s price is fully recovering today.
At the time of this writing, it was trading above$33,300, according to CoinGecko, and is showing signs of strong support around this price level.
The current price action is developing precisely as we had foreseen, and if the trend continues, it will soon start a brand new rally, before the end of the month.
Today the recent uprise in price can be attributed, once again, to Elon Musk, CEO of Tesla.
According to the Guardian: “Bitcoin is a good thing,” Musk said in comments broadcast on social audio app Clubhouse on Monday. Musk said he was “late to the party” in backing bitcoin.”
We think that as long as bullish news continues to be released, and this hype by celebrities does not stop, retail investors will continue to pour into the bitcoin market. Hence, it’s not surprising that the price is rising.
In terms of technicals, the 20-day Exponential Moving Average (EMA) is already above $30,000 which means that we do not expect it to go much below this range even if the price drops again.
The volume is also picking up the pace again and will soon be above its 21-day moving average.
Additionally, BTC/USD surpassed $33,000, just like we forecasted and is now finding support above this price range. For now, we expect bitcoin to continue its uptrend and soon move toward $35,000.
Let’s hope these new buyers don’t dry out too quickly so that once the price breaks its previous high, it makes a rapid move toward $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 $30,000.
- BTC/USD daily volume goes back above its 21-day Moving Average.
What Do Traders Think?
The first tweet of the day comes from The Wolf Of All Streets (Scott Melker), an investor, podcaster and author of The Wolf Den Newsletter.
In his post, the investor shares a 1-day chart of BTC/USD. He added two trendlines, one showing support at the bottom and another resistance at the top, and he wrote:
"We now have a perfect bull flag."
According to Investopedia, this is a bullish formation since
"the stock refuses to drop appreciably, as bulls snap up any shares they can get. The breakout from a flag often results in a powerful move higher, measuring the length of the prior flag pole."
This means that Melker thinks that there is a strong probability of the price moving higher. In our opinion, this pattern will complete in the upcoming weeks, definitely before the month's end.
When it does, we expect a significant move to higher price ranges, probably above $50,000.
What could be the main drivers for the past few months' price appreciation? Also, do we think these buyers will remain in the market for the foreseeable future?
To answer the first question, let’s pick up on the above post from Jameson Lopp, whose Twitter profile describes him as co-founder and CTO of Casa.
He shares the chart for the subReddit /r/bitcoin, an online community that counts with over 2 million members in his post.
As we can see from the chart, the growth has been exponential. Since January 2019, it nearly doubled in the number of users registered in the channel.
Could this mean a massive inflow of new buyers is about to enter the bitcoin space? We think so.
Not only due to the most recent price appreciation but also due to the issues with Robinhood App.
Could this mean the price of bitcoin will soon pick-up where it left off before starting its consolidation? If so, besides the new retail buyers, who else could be buying bitcoin?
The next tweet comes from Rafael Schultze-Kraft, whose Twitter profile describes him as a data scientist, on-chain analyst, and CTO at Glassnode, and it tries to answer the previous question.
In his post, Schultze-Kraft shares the Grayscale Holdings' chart vs Bitcoin Issuance, since the beginning of 2021. What the data shows is something rather spectacular. Since around mid-January, Grayscale's total number of bitcoin surpassed the number of bitcoin mined per day.
This means that a single institution is acquiring more bitcoin than what is mined per day.
We think this continued pressure on the supply of bitcoin will eventually give birth to a new bull-run cycle, where the price of bitcoin goes above $50,000.
Hence, we believe now is the perfect time to accumulate and not sell. Not only that, but just like Schultze-Kraft wrote:
"That's who you're selling to (Grayscale), when you're selling now."
The last post of the day comes from Coin Bureau, a podcaster and news analyst.
His post essentially builds on the previous two, and it serves as proof that bitcoin continues to leave exchanges, this time from Coinbase Pro.
In his tweet, Coin Bureau shares a chart of “BTC: Coinbase Pro Outflow”, and he also wrote,
“Over 15.2k BTC left Coinbase Pro yesterday.”
What the data shows is that not only there was a massive outflow from Coinbase Pro yesterday, but this trend has been going on since last year. Also, in early January, there was an outflow of over 40,000 bitcoins in just a few days.
To conclude, this is living proof that wealthy individuals are taking their bitcoin out of exchanges, which puts extra pressure on the coins' price that remain there for trading.
With all these data points in mind, how do we think the price of bitcoin will flow tomorrow?
Bitcoin Price Prediction
Today, bitcoin's price recovered and went above $34,000, according to CoinGecko. Since
yesterday, it has grown over 4%. The trend that started during the weekend seems to remain intact, a relatively bullish outlook for the rest of the week.
Additionally, bitcoin remained within our predicted range. At the time of this writing, bitcoin was trading at $33,400.
Regarding the medium- to the long-term price action of bitcoin, we think the odds favor a continuation of the bull run. As we discussed above, Grayscale and other institutions continue to accumulate bitcoin; and as long as "smart money" investors keep increasing their bitcoin holdings, we are hopeful we will see steady growth in the price of bitcoin.
Adding to the above, we also discussed what traders think about the most recent price action and how most believe the bitcoin price is forming a bull flag that will soon break to the upside. Notice how BTC/USD keeps putting in higher lows, since the first crash that took price below the 20-day EMA. This is another extremely bullish sign.
How do we think the price will trade throughout the day? As shown in the above chart, we believe that bitcoin could find a top close to $38,000, but we highly doubt BTC/USD goes above $40,000.
There are still many sellers around $35,000, meaning the price should find it difficult to move over this critical price range.
On the other hand, we don't expect the digital currency to drop much below $31,000 due to the sheer number of buy orders placed around $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 think it's still possible that BTC/USD will attain a brand-new record price around $50,000 before February comes to an end. For now, we remain bullish on the long-term price action, as long as the price holds above the 20-day EMA and a significant number of new buyers keeps entering the bitcoin space.
Today could be a critical day for bitcoin's price, in case it closes the day above $35,000. While volume is low, there is a chance that volatility increases, which could trigger sharp moves to the upside or downside, so beware.