During the past two days, the price of bitcoin had a massive move upwards. It went from around $33,000 to $38,000 in less than 24 hours.
Today, however, there has been a minor 1% drop in BTC/USD, according to CoinGecko. We don't think a little shake is enough to flood the market with new sellers, so we believe bitcoin will soon pick up the pace and go above $40,000.
At the time of this writing, bitcoin was trading above $37,900, according to CoinGecko, and it is finally showing signs of having found strong support above $35,000. We think a retest around this price region would be significant for the short-term price of bitcoin.
Therefore, we think investors and traders should expect the bull run to ensue. Additionally, BTC/USD traded within the predicted blue range without surprises. Volume continues to grow even though today we noticed a significant spike in sell orders.
Independent of short-term sellers joining the space, the broader outlook is astonishingly bullish.
Just recently this Wednesday, Microstrategy had a successful conference that heavily focused on bitcoin, which a large number of corporate CEOs and executives attended.
According to CoinDesk's Danny Nelson:
"Every company has to make one of two choices" when faced with a world of belligerent money printing, Saylor said. "You either have to decapitalize, which is kind of like self destruct … or you have to recapitalize with an asset which is going to appreciate faster than the rate of monetary supply expansion. This is where bitcoin comes in."
While this type of positive news continues, and more institutions and corporations join the bitcoin space, the greater the likelihood BTC/USD will continue to appreciate.
For now, we expect bitcoin to continue its uptrend and move toward $40,000 soon.
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?
The first tweet of the day comes from Adam Mancini, a futures trader with over 74,000 followers on Twitter.
In his post, Mancini explains why he thinks the last two-week price movement was an excellent sign for bitcoin's short-term price. Essentially, the trader highlights how bitcoin is "resetting & charging up for a move after the December rally."
Mancini also shares a chart of the 12-hour price of bitcoin since March 2020, and he adds the relative strength index (RSI) indicator at the bottom. According to Investopedia:
"a momentum indicator used in technical analysis that measures the magnitude of recent price changes to evaluate overbought or oversold conditions in the price of a stock or other asset."
The trader concludes that bitcoin's price will continue to push higher and will soon break its previous record price around $43,000 and then move towards $56,000.
We agree with Mancini, and we also add that the current bullish environment is attracting heavy-weights into the bitcoin market. If the trend continues, we could be witnessing the start of the single greatest bull run of our lives.
In his tweet, Elmandjra lays out a chart of bitcoin's price containing the
"Hypothetical Price Behaviour of Bitcoin Consistent with Previous Bull Market Price Behavior."
The idea behind the chart is to show how bitcoin could move in the future if its price followed the behaviour from past bull runs, such as in 2017.
The author writes:
"This is how bitcoin's price would behave if the current bull market dwarfed the 2017 bull market in the same way the 2017 bull market dwarfed the 2013 bull market."
If the behaviour of bitcoin’s is consistent with history (past performance does not guarantee future results), there is a chance that the new bull run completely smashes the 2017 record price.
If that happens, the price of bitcoin would need to move towards $400,000. At that point, the total bitcoin market capitalization would be over $7 trillion.
Even though this may sound a bit of a stretch since the total bitcoin market cap has not broken the $1 trillion mark, we're confident that soon it will. We partially agree with Elmandjra's analysis, although we find it difficult to believe people will be acquiring bitcoin this year for such high prices.
The next tweetstorm comes from Eric Wall, CIO at Arcane Assets.
In his post, Wall describes the sentiment of wealthy players, including hedge funds and other financial institutions. Essentially, it’s quite bullish.
Wall writes,
“Many of the wealthiest HNWIs, hedge funds, institutions etc. are still doing their Bitcoin 101 with their advisors as we speak.”
Wall’s comment goes along what we have been writing in past editions of the Daily Roundup.
New smart money is looking to move significant portions of their wealth into bitcoin, and perhaps other cryptocurrencies, which may be the catalyst for a new epic bull cycle.
In a later tweet related to the initial post, the CIO shares what he considers to be the most critical signal of all, and that confirms our suspicions: the hundreds of big players that are pouring millions and billions of dollars into bitcoin, courtesy of Bitcoin Treasuries.
The last post of the day comes from Justin (Justin Trimble), a cryptocurrency and Non-Fungible Token (NFT) enthusiast.
In his post, Trimble shares a relic: a message from the legendary Hal Finney, the first-known person to own bitcoin apart from Satoshi Nakamoto, Bitcoin’s creator, showing how bullish Finn was on the NFT space.
Essentially, Finn believed that a great use case for the cryptocurrency technology was: “Crypto trading cards.” Finn wrote on the message board in 1993: “Fans of cryptography will love this fascinating examples of cryptographic arts.”
Almost 30 years before the development of NFTs, Finn was already 100% correct in his analysis.
Today, the total NFT market is worth over $175 million, according to NonFungible, which proves Finn’s point.
Remember that the first NFT set was called Crypto Kitties and released by Dapper Labs in late 2017, about three years ago.
Hence, we believe that once NFTs and the bitcoin space merge, we might see the rise of a brand new market where NFTs and bitcoin are interlocked with each other. Perhaps, the combination of bitcoin, DeFi and NFTs will be the catalyst to bring a significant portion of the worldwide population into bitcoin and other cryptocurrencies.
Whatever the result may be, we’re pretty sure the future does look bright.
Let’s now discuss how we think bitcoin will trade tomorrow and during the weekend.
Bitcoin Price Prediction
Today, bitcoin's price stalled and continued to trade close to $38,000, according to CoinGecko.
Despite that, since Monday, BTC/USD has grown by over 21%. How bullish is that?
At the moment, the $40,000 price range is in play for the weekend. Additionally, bitcoin remained within our predicted range. At the time of this writing, the digital currency was trading at $37,900.
Like we wrote in the introduction, there is little chance for a price reversal while institutional investors and wealthy individuals keep accumulating bitcoin. Like we discussed in the previous section, most traders think the next significant move will be up. Most think the $50,000 price range will be reached relatively soon, perhaps during the current month.
For the time being, let's wait for the price action to complete its minor consolidation. If BTC/USD finds support above $35,000, we think the price will hold this critical range and soon go above $40,000.
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 weekend? As shown in the above chart, we believe that bitcoin could find a top above its record price of $42,000, but we highly doubt BTC/USD reaches this level. It's quite likely new sellers enter the space around $40,000.
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.