Today, bitcoin's price had a minor drop of 1% after the massive rally yesterday that pushed the price to a record above $55,000, according to CoinGecko. We think bitcoin's price will continue to follow this recent uptrend and most likely reach $60,000 by Sunday, the latest.
Additionally, in the past week, BTC/USD has jumped close to 17%. What a spectacular price performance. At the time of this writing, bitcoin’s price was trading around $51,900.
While bitcoin remains above $50,000, we have every reason to be bullish on the short-term price action. Not only that but as we discuss later in the Daily Roundup, it seems that gold investors could be now turning to bitcoin, adding more pressure to the declining bitcoin supply available at exchanges.
Adding to the above, our prediction that BTC/USD would continue to move upward was correct.
As we stated earlier, we expect the price to fill in the rest of the predicted range (blue) by the end of the week.
While behemoths like Tesla and MicroStrategy continue to accumulate bitcoin, the chances for increased volatility rise.
As CoinDesk's Muyao Shen wrote,
"Bitcoin (BTC) returned above $52,000 since markets opened in the U.S. on Thursday. As it moves between $51,000 and $52,000, traders are preparing for more volatility in the near term."
Therefore, it is likely that BTC/USD will continue to move into higher price ranges before suffering a 20% to 30% correction.
Our only concern is the current low volumes the market is experiencing. We sincerely hope that a horde of new buyers soon enters the market to keep the show going.
For now, we expect bitcoin to continue its upward trend and move above $60,000 by the end of the week. We remain bullish, as bitcoin has found support above $50,000, which is an excellent sign.
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 $50,000.
- BTC/USD daily volume goes above its 21-day Moving Average soon.
What Do Traders Think?
Today's first tweet comes from Holger Zschaepitz, whose Twitter profile describes him as the author of "Schulden ohne Sühne?" a book about how states rely too much on debt.
In his post, Zschaepitz shares a chart of the price of gold vs the bitcoin price since April 2019.
What's quite noticeable is the inversion of the gold's price trend since the summer of 2020, while bitcoin's price started to spike around the same time.
As the writer and analyst wrote:
"While the cryptocurrency hit fresh ATH >51k, Gold has dropped <$1800."
Could this mean gold investors are now turning into bitcoin due to the massive and ongoing price appreciation? That's a fun idea one can play around with, even though little data supports or refutes this idea.
Nevertheless, the matter is that gold's price keeps dropping while bitcoin keeps on rising.
The next post comes from Rafael Schultze-Kraft, whose Twitter profile describes him as a data scientist, on-chain analyst, and CTO at Glassnode.
Schultze-Kraft retweeted a chart by Glassnode that contains the “USDC Exchange Inflow
Volume” in his tweet. What’s quite astonishing is the current uptrend in terms of USDC being deposited at exchanges.
Could this mean the BTC/USD will maintain its recent uptrend, and bitcoin will move to even higher price ranges? According to Schultze-Kraft, that’s precisely what is going on. As the analyst wrote:
“#Bitcoin at $51k and more gunpowder arriving.”
We agree with Schultze-Kraft, and we also think the price of bitcoin will most likely try to break the $55,000 price range sometime during the weekend. Let’s hope enough buyers soon come into the market to support our thesis.
The next tweet comes from Willy Woo, a crypto analyst whose Twitter profile describes him as an on-chain analyst. This tweet adds to the previous we discussed.
Woo retweeted a post from Documenting Bitcoin, containing a chart of the "Net Positions of CME Bitcoin Futures by Trader Category". Interestingly, while Hedge Funds are shorting bitcoin, both Asset Managers and Other institutional investors are long on the cryptocurrency's price.
Not only that but as Woo explains: "hedge funds are yielding ~20% "risk free ROI" on $1.25b of capital. Means they bought 25,000 BTC in order to do this (hold spot, sell futures)."
Essentially, these Hedge Funds had to borrow around 25,000 bitcoin futures contracts at spot prices, hoping to sell those contracts at the price they bought, while the price of bitcoin drops.
According to Investopedia:
"Short selling is an investment or trading strategy that speculates on the decline in a stock or other security's price."
Hence, if bitcoin's price continues to rise, what will most likely happen is those shorts being liquidated, meaning that the short sellers (Hedge Funds) will have to repurchase bitcoin on the market at a higher price than what they borrowed.
Investopedia concludes that
"The risk of loss on a short sale is theoretically unlimited since the price of any asset can climb to infinity."
The last post of the week comes from Joseph Todaro, a partner at Greymatter Capital.
In his post, Todaro shares a hilarious chart containing the price of “Bitcoin, Tulips & South Sea Company”. Todaro’s goal was to compare the price appreciation and the “bubble effect” between these assets.
What’s relatively easy to understand by looking at the data is that it makes little sense to compare bitcoin to both the Tulips bubble and the South Sea Company bubble.
While bitcoin’s price behaves in a “bubbly” way, the difference is the recovery. While neither tulips price nor the South Sea Company’s price ever recovered, bitcoin keeps rising, falling, and recovering past its previous high.
Plus, bitcoin is a critical technology that enables the transfer of value digitally across the globe and essentially enables any individual to be their own bank.
Bitcoin Price Prediction
Today, bitcoin's price consolidated below $55,000. Since last week, it has risen north of 17%. At the time of this writing, it was trading close to $51,900, according to CoinGecko.
Early in the week, we predicted bitcoin's price would break $50,000 and find support above this critical range. Additionally, we also guessed that BTC/USD would discover a new high before the week's end. That's precisely what happened. We are now predicting a continuation of the bull run, with BTC/USD topping around $60,000 and then correcting toward $55,000.
Just like we wrote throughout the week, as long as institutions, corporations, and wealthy individuals keep accumulating bitcoin, there is no telling how high the price may go. In our opinion, the supply shock we are witnessing will only aggravate.
Therefore, we expect volatility to play an essential role in the next few days.
How do we think the price will trade today? As shown in the above chart, we believe that bitcoin could top around $60,000 if new buyers enter the space. We think that short-sellers will push down bitcoin's price once it goes above this critical level; hence a correction towards $50,000, or even below, is not out of the woods just yet.
On the other hand, we don't expect the cryptocurrency to drop much below $48,500, even if there is a significant sell-off. In the worst-case scenario, we see bitcoin finding support around this price range and then quickly moving back above $50,000. However, as the price grows, the less likely it is the above scenario to take place. We think BTC/USD will hold the critical support level at $48,500.
To finalize, the Volume Profile Visible Range (VPVR) shows a high number of buy orders between $48,000 and $46,000, and then again around $40,000, which means BTC/USD should not go much below $45,000, even if bitcoin's price trend reverses for a short period.
As a reminder, we believe BTC/USD will most likely break $60,000 soon.