Yesterday, the price of bitcoin suffered a notable decline, dropping below the 20-day Exponential Moving Average (EMA) for a brief period. However, today we’re noticing a significant increase in BTC/USD, which is currently up more than 6%. As long as bitcoin continues to trade above all EMAs, there is no reason to think the bull run is over.
As we discuss below, retracements in the price of bitcoin are welcomed, as they allow investors and traders to further accumulate the cryptocurrency before the price swings back above its prior high, close to $42,000.
At the time of this writing, bitcoin was trading around $32,500, according to CoinGecko.
Additionally, we argue that there is significant support between the current price and $30,000 where the 20-day EMA sits.
Regarding our prediction yesterday, BTC/USD traded within the blue range, but did not reach the top of $35,000 that we had forecasted. However, the price did come close to this top.
For now, we expect bitcoin to continue trading within the current consolidation range, between $30,000 and $35,000. If the number of buy orders continues to grow and bitcoin goes above $36,000 there is no stopping it from quickly approaching its prior high.
The short-term price action of bitcoin greatly depends on retail adoption. Following the recent situation where investors using the Robinhood app were prevented from purchasing shares of GameStop, we speculate that some of these individuals might start trading bitcoin.
As reported by Turner Wright of Cointelegraph:
“The meteoric rise of a seemingly underappreciated financial asset like GameStop stock has led to many on social media comparing investing in the retail store to that of crypto, and the terminology and comparisons are coming along for the ride. Investors not typically associated with crypto have begun to use lingo unique to the space.”
For now, we think BTC/USD might experience a few extra bounces between $30,000 and $35,000, 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 Ki Young Ju, CEO of Crypto Quant.
In his post, Ju shares the chart of “All Stablecoins Inflow Transactions Count for All Exchanges.”
Ju highlights that a significant inflow of stablecoins being deposited to exchanges.
Could this mean people are looking to buy bitcoin?
Could the price of bitcoin continue to move to higher price ranges, and even go above $35,000 before the end of the week? We believe that’s possible.
In any case, Ju seems to think stablecoins deposits means money will flow into bitcoin. As he wrote:
“You know what to do. $BTC.”
The next comes from Michael van de Poppe, whose Twitter profile describes him as a full-time Dutch trader at the Amsterdam Stock Exchange.
In his short message, van de Poppe contemplates that there is much more interest from retail buyers when the price of bitcoin is higher than when it is lower.
This suggests that bitcoin still behaves as a Veblen good. According to Investopedia:
“demand increases as the price increases, because of its exclusive nature and appeal as a status symbol. A Veblen good has an upward-sloping demand curve, which runs counter to the typical downward-sloping curve. However, a Veblen good is generally a high-quality, coveted product, in contrast to a Giffen good, which is an inferior product that does not have easily available substitutes.”
In other words, we expect that demand for bitcoin to increase as the price grows in value. And since bitcoin is becoming increasingly scarce, due to institutional investors like Grayscale scooping up a significant portion of the coins being mined, we think there will be a massive rise in price in the next upcoming months.
Not to mention that retail interest has declined from its peak in December when bitcoin hit a new all-time high. Therefore, we think there is plenty of room for the price of bitcoin to grow, which should attract a horde of new retail buyers, once BTC/USD is close, or even surpasses, its prior record price, near $42,000.
The third post of the day comes from The Moon (TheMoonCarl), a Bitcoin investor and trader with over 118,000 followers on Twitter.
In his post, The Moon shares a weekly chart of the price of bitcoin, adding a few arrows pointing to the moments when the price of bitcoin turned bearish in the previous bull run of 2017.
On average, it seems that each retracement lasts around three weeks. The Moon points to the current retracement that is in its third week. Could this mean the bears will retrace and new buyers will finally enter the space?
We think that this is the most likely scenario for the next two-to-four weeks. The trader also writes,
“#Bitcoin is still perfectly on course towards $100,000,”
so this should ease the minds of those investors and traders who may think the bull run is over.
Most analysts are still bullish on the long-term price of bitcoin.
The last tweet of the day comes from Kevin Svenson, a YouTuber and cryptocurrency trader.
In his post, Svenson shares his personal views on the long-term price action of bitcoin. Just like we wrote above, he’s also quite bullish on the price of bitcoin for the rest of 2021.
As he shows in the chart, the trader believes bitcoin will hit $250,000, and then retrace back towards $50,000 during 2022.
Those targets do match our analysis and are not far from our long-term price prediction. Our main concern is the time frame. We’re unsure if bitcoin will hit its highest point within 2021, or if this will stretch to 2022.
As price action develops, we’ll get to the bottom of it.
For now, let’s dive deep into how we think the price of bitcoin will move tomorrow, and throughout the weekend.
Bitcoin Price Prediction
Today, the price of bitcoin had a major recovery and BTC/USD went above$32,500. according to CoinGecko, after falling back below its 20-day EMA, for a short period during the prior trading day. In the span of 24 hours, the price of bitcoin fell and recovered north of 5%.
Additionally, bitcoin remained within our predicted range.
Despite the current downtrend, a high number of investors and traders remain bullish on the long-term trend of the price of bitcoin. Most argue the current retrace will soon be over and the price will surpass its previous all-time high and move towards $100,000 or even above.
As long as smart money continues to increase their bitcoin holdings, we are hopeful of steady growth in the price of bitcoin.
How do we think the price will trade today and during the weekend? As shown in the above chart we think that bitcoin could find a top close to $39,000, but we highly doubt BTC/USD goes above $40,000. There are still a large number of 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 $30,000 due to the sheer number of buy orders placed around this price level.
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 horde of new buyers keeps entering the bitcoin space.
Be careful with the market until BTC/USD closes above $35,000 as there’s plenty of room for a choppy weekend. While volume is low, there is a chance volatility increases, which could push the price of bitcoin up or down.
We also notice the price is putting in higher lows, which is a sign of recovery.