Yesterday, the price of bitcoin did not change much, after suffering a massive drop last week.However, today we’re noticing a significant decrease in BTC/USD, which is currently more than 5%. Some good news is the fact that the price of bitcoin is still trading above all Exponential Moving Averages (EMAs).
While we thought that BTC/USD would start to recoup some recent losses, it continued its descent toward $30,000. At the time of this writing, bitcoin is trading around $30,900, according to CoinGecko, but as there is almost no support left, we don’t think the price will hold above this range for much longer.
Regarding our prediction yesterday, the price went below 2% our predicted bottom, but it found strong support near the 20-day EMA. Essentially, after touching $30,000, the price had a quick recovery, and it is back above this support level.
For the time being, we expect bitcoin to continue trading within the current consolidation range, between $30,000 and $35,000. However, if there isn’t significant growth in the number of buy orders, we do not expect bitcoin to keep holding above $30,000.
Probabilities show that once a new trend begins, the likelihood it will continue is greater than the likelihood it will reverse. Does this mean we think bitcoin won’t surpass the $42,000 level and find a brand new high? Of course not.
We still think there are far more reasons to remain bullish about the long-term price of bitcoin than there are to be bearish. Nonetheless, at the time of this writing, we can’t deny the obvious fact that the price of bitcoin broke below the consolidation pattern, and it will most likely continue to drop until it finds significant support, perhaps between $27,000 and $29,000.
In other news, shares of GameStop skyrocketed due to a group of Reddit investors who have been pushing the price from $17 to now $331, according to the New York Stock Exchange. As this post shows, $GME was the most traded stock yesterday. So unexpected.
This shows that the market remains hot, and there is plenty of money to be invested in bitcoin. As we discuss further in the Daily Roundup, smart money continues to accumulate bitcoin, the most important indicator the bull run will continue after the price recovers from this recent dip.
For now, we think BTC/USD might have a few extra bounces between $27,000 and $32,000 before starting to rally toward $40,000. Once the price breaks its previous high, we should see a rapid move toward $50,000.
As a reminder, we are confident 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 $30,000.
- BTC/USD daily volume goes back above its 21-day Moving Average.
What Do Traders Think?
The first tweet of the day comes from Alex Kruger, an economist and trader with more than 60,000 Twitter followers.
In his post, Kruger asks bulls and bears the reasons behind their bullishness or bearishness. He writes:
“$BTC is stuck in the 29K-35K. $BTC is now at 32K, right at the midpoint.”
Essentially, Kruger is trying to gauge market sentiment to better understand why bitcoin fans think the price will move up or down.
Just like a high number of players, Kruger is uncertain about the short-term price action, and he is right to do so. Is the bullish trend just going through a rough period of consolidation, or has the bitcoin price just found the next cycle top?
The next update builds on Kruger’s tweet and comes from Rekt Capital, whose Twitter profile describes him as a Cryptocurrency Trader and Analyst.
In his post, Rekt Capital shares his views on the ongoing choppy bitcoin price action. The trader writes that even through bitcoin is down more than 25% from its all-time high near $42,000, this is “Not a Bear Market, just a retrace.”
Essentially, Rekt Capital believes that the digital currency’s recent 26% drop from its record price to be a retrace, and not a reversal, of the long-term upwards trend, which started after the crash in March 2020.
There are a few reasons that support his thesis: the bitcoin hash rate continuing to grow, the total transaction value continuing to increase, or, to us, the most important reason, the fact that institutional investors keep pouring money into the bitcoin market.
However, are these good enough reasons for the digital currency to attract more buyers than sellers?
The third post of the day comes from Raoul Pal, a leading macro analyst and the co-founder & CEO of Real Vision Group.
We’ve picked the above tweet, since it shows a contrarian view to the one just presented by Rekt Capital.
In his post, Pal shares his thoughts on why he thinks this may not be a great time to buy, writing:
“On alert for a market clearing event. Equities are probably the weakest spot.”
The macro analyst says this because some of the major markets, like those for the U.S. dollar, gold, and bitcoin, are currently undergoing a consolidation phase where volatility is causing pullbacks. Pal also wrote that “something feels very risky about the markets.”
In our opinion, the fact that short sellers have taken control of the order books does not help the price of bitcoin to recoup some of the recent losses. However, we think most of the selling pressure is coming from whales, who have been pushing down bitcoin's price so they can accumulate more of it.
Let’s dig a bit deeper and try to find solid evidence for the above claim.
The last tweet of the day comes from i.am.nomad, a bitcoin trader whose Twitter describes him as a “profit maximalist.”
In his post, i.am.nomad shares the chart of the “Number of Addresses with Balance ≥
1k Bitcoin,” courtesy of Glassnode.
The data shows that the number of addresses who own over 1,000 BTC just hit a brand-new high.
In other words, wealthy individuals and organizations keep increasing their bitcoin, buying the cryptocurrency from less sophisticated investors.
Therefore, we’ll remain bullish on the price action of bitcoin as long as whales continue to accumulate.
We believe following smart money is the right strategy. Hence, while smart money accumulates, we’ll accumulate as well.
Bitcoin Price Prediction
Yesterday, the price of bitcoin had a minor recovery and even went above $32,000 for a short period, according to CoinGecko. Today, the price had a significant fallback and is trading below $30,100.
Additionally, it went below our predicted range, touching the $30,000 price level.
Despite the current downtrend, a high number of investors and traders remain bullish on the long-term trend of the price of bitcoin; however, some argue the current choppy price action is raising flags that the consolidation period might last a bit longer.
Still, since investors who we describe as smart money continue to increase their bitcoin holdings, that gives us some peace of mind and tranquillity. As long as wealthy individuals continue to add more bitcoin to their holdings, we don’t think the long-term trend has been broken.
Coming back to the topic at hand, how do we think the price will trade today? As shown in the above chart, we think that bitcoin could find a top close to $36,000, but we highly doubt BTC/USD comes close to reaching this target. There are still a large number of sellers around $35,000, meaning the price should remain below this range for the time being.
On the other hand, we don’t expect the digital currency to drop much below $28,000 due to the sheer number of buy orders placed between $27,000 and $29,000.
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 have scrapped all chances bitcoin will go above its record price during January, and we think a retracement below the 20-day EMA is not only possible but likely.
Hence, trade with care and use these opportunities to add BTC to your portfolio.