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Bitcoin (BTC) is almost unrecognizable as it starts the first working week of 2021, retaining $30,000 support and hitting astronomical new highs.
Hard to believe for hodlers, price action continues to wow as Monday gets underway, and attention is turning to what might be next.
Cointelegraph takes a look at five factors that investors might wish to monitor in the coming days in what is one of the most volatile Bitcoin trading markets in history.
It’s another curious week for stocks as last week’s all-time highs on several indices look set to continue.
As the first few days of the new year drew to a close, the Dow Jones and S&P 500 hit record highs — this despite the encroaching coronavirus sparking ever tighter lockdowns across the world.
For Bitcoiners, the Dow took on a different type of significance last week, with BTC/USD “flipping” its 30,600 points for the first time as it continued on to $34,000 and higher.
This week, analysts predict stocks to go higher still, part of a long-anticipated rebound which, much like last year, appears at odds with the situation on the ground.
“A strong vaccine-led recovery in global growth will provide a large boost to cyclical assets, including commodities, cyclical equity sectors and emerging markets,” Goldman Sachs told Bloomberg as part of its 2021 outlook survey.
“However, the path may be tricky as the market balances spot growth weakness with a forward outlook that is more supportive.”
Not everyone was so bullish. Fidelity, the asset manager well known for its pioneering pro-Bitcoin stance, countered:
“2021 is likely to be about capturing relative opportunities as investors price in economic and virus-related developments.”
After clinching $34,800 over the weekend, Bitcoin is looking decidedly in need of a consolidatory period as the week gets underway.
The highs, which still seem unreal to many investors, have plenty of hurdles to overcome in order to defend themselves and not allow Bitcoin to cave to the bears.
One of the most pressing issues for traders is the Bitcoin futures “gap” produced by the weekend’s volatility. Lying between $29,695 and $32,400, the gap joins the one left last week as one of the largest ever seen on the Bitcoin futures chart.
As Cointelegraph has previously explained, “gaps” in futures are the differences in price between the end of futures trading on a Friday and the start on the following Monday. When heavy volatility hits in between, the resulting void often forms a short-term price target.
In this case, Bitcoin thus has an impetus to retest levels at just below $30,000. Should it wish to fill lower gaps which remain untested, the market may dip further still — the pit of last weekend’s gap lies at $23,800.
While previous months saw many a gap get filled, however, the idea of a $24,000 Bitcoin is now a remote possibility, according to popular statistician Willy Woo.
“We’ll never see $20k BTC again,” he forecast on Sunday.
“$24k support would need a black swan event to breakdown. Floor price supported by long term buyers is rising very fast.”
$20,000 itself forms a zone of interest for those studying gaps, with two large vacuums in futures markets still open below that significant level.
It’s all change for the better among Bitcoin’s core fundamentals, meanwhile. After a month of small decreases, network difficulty is once again set to push upwards to hit new record highs.
At the next automated readjustment later this week, difficulty is currently expected to increase by just over 5%.
The past two readjustments saw drops of 2.5% and 0.4% respectively, an interesting contrast to the rapid increases in spot price seen at the same time.
Difficulty is arguably Bitcoin’s most important technical aspect when it comes to its status as “hard” money, allowing the network essentially to govern itself and stay secure regardless of miner participation or price action.
In tandem with difficulty, hash rate is likewise challenging all-time highs. As of Monday, seven-day average values for the metric stand at 145 exahashes per second (EH/s), just 1 EH/s off record highs seen last October.
Hash rate refers to the computing power dedicated to participating in the Bitcoin network, and current data suggests that participation and desire to keep the network secure is stronger than ever.
Perhaps the most telling sign when it comes to price trajectory is coming from within cryptocurrency itself.
While Bitcoin alone is impressive, this weekend ended with an even more conspicuous surge in altcoins, and specifically Ether (ETH). The largest altcoin is up over 30% in the past 24 hours alone, bringing its weekly gains above 50%.
As Cointelegraph reported, Sunday saw it clinch a key level against BTC, and in dollar terms, the largest altcoin is back in four figures for the first time in three years.
In the words of Cointelegraph Markets analyst Michaël van de Poppe, such a move suggests that a return of “altseason” — a period of rapid rises across altcoin markets while Bitcoin consolidates — has de facto arrived.
“Another week that Ethereum will close above the crucial threshold on the BTC pair,” he commented late Sunday.
“Most likely some sideways continuation before upwards continuation towards a new higher high. 2021 is looking bright for Ethereum.”
The token’s success was long in forming. Ether spent much of 2020 as the butt of jokes among Bitcoiners, as even the release of its long-awaited Ethereum 2.0 protocol transformation failed to have a noticeable impact on price.
Nonetheless, the altcoin was in fact the best investment of the year, outperforming Bitcoin versus its March lows when it traded at just $113 — one tenth of current levels.
If Ether is dictating the reemergence of altcoins, such as THETA, for example, it is already evident if one examines the state of Bitcoin’s market dominance.
As ETH/USD surged overnight on Sunday, the share of the total cryptocurrency market cap owned by Bitcoin began to fall dramatically. Against 73.5% earlier on Sunday, press-time levels are more like 68.3%, data shows.
That kind of behavior is a classic indicator of altseason, and will remind longtime hodlers of the events of January 2018. At the time, Bitcoin was coming down from highs of near $20,000, but altcoins exploded, ETH/USD hitting current all-time highs of $1,500.
Given that Bitcoin has managed to crush its own record from 2017, it is that pattern of behavior which is fuelling speculation that Ether and other altcoins will go much higher in the short term.
“Bitcoin and ether ETH are already the biggest hits of 2021,” Tyler Winklevoss, co-founder of exchange Gemini, summarized to Twitter followers.
It’s not just Ether. Litecoin (LTC), the fourth-largest cryptocurrency by market cap, has added 15% since Sunday, once more coming within a hair of flipping XRP to take the number three spot.
XRP, beset by problems thanks to legal action against Ripple, has still managed to put in some form of progress, rising by almost 10% overnight to reclaim $0.24.
Bitcoin (BTC) has had a week like no other, hitting fresh record highs of $28,400 and staying near the top — what’s next.
As markets return to digest a wild Christmas, Cointelegraph presents five factors set to help with Bitcoin price direction this week.
Markets have been spared a nightmare this week after U.S. President Donald Trump agreed to sign off on Congress’ $900 billion coronavirus stimulus bill.
Set to add a large amount of debt to the Federal Reserve’s existing mountain, the package includes various benefits for businesses but stops short of providing Americans with the same level of direct financial support seen in March.
Trump had said that the low direct payment amount of the second stimulus — $600 against $1,200 last time — meant that he could not condone it, but subsequently changed his mind.
Markets have thus begun a new week on a positive note, with slight gains seen on S&P 500 futures prior to the Wall St. open.
At the same time, gold has returned in style, with data showing that the precious metal is now on track for its biggest one-year gain in a decade.
Versus the end of November, XAU/USD is up $111 or 6.25%.
“As President @realDonaldTrump vetoed just nine bills, the fewest number since Warren Harding, who served just two years, from 1921-1923,” gold bug and infamous Bitcoin naysayer Peter Schiff tweeted as the bill was signed.
“Not since Chester Arthur (1881-1885) has a president who served a full term vetoed fewer bills. You can’t drain the swamp by making it deeper.”
After striking a fresh tone with a wider audience over Christmas with runs to new all-time highs, Bitcoin may soon have to face the music with the establishment, sources warn.
Hitting $28,400 and capping monthly gains of 55%, Bitcoin is now firmly on regulators’ radar as its mainstream appeal heightens. Even for its proponents, the next year may prove to be a challenging time.
With outgoing Treasury Secretary Steven Mnuchin leaving his mark with an attempt to force new laws over noncustodial wallets, his replacement, Janet Yellen, may hardly be an improvement, they say.
“Generally, I think we have had challenges with the Dems — they prefer more regulation, more oversight,” Meltem Demirors, chief strategy officer at digital-asset manager CoinShares, told Bloomberg on Sunday.
“I am a bit worried about the direction things are trending.”
As always in the U.S., the patchwork of political allegiances means that any assault may be tempered by the presence of crypto-friendly figures elsewhere. The new chair of the Securities and Exchange Commission (SEC), Elad Roisman, is considered to be a fan.
Concentrating on the latest Bitcoin spot market action, Monday is shaping up to be a major test for bulls given the momentum seen over the weekend.
After hitting all-time highs of $28,400 on Sunday, Bitcoin saw a pullback which many had already expected.
“#Bitcoin undergoing a very healthy correction as it went quite vertical. Might be the temporary top for now,” Cointelegraph Markets analyst Michaël van de Poppe summarized on social media.
“What’s next? Consolidation, sideways action, less volatility. Giving space to the rest of the markets to pace up. $BTC pairs doing well.”
Van de Poppe is eyeing the potential for altcoins to begin their response to Bitcoin’s recent glories, arguing that signs are already beginning to appear that “altseason” is around the corner.
“After #Bitcoin finishes the run (and it is quite vertical), the money will flow towards large caps. And after that towards mid-caps and small caps,” he continued.
“Altcoins are not dead, the money flow is still the same.”
While floundering against BTC, some popular altcoins are still delivering significant returns in USD terms, with market leader Ether (ETH) trading above $700 for the first time since May 2018. Versus its lows of $113 in March, ETH/USD is now up 530%.
Bitcoin is contending with the largest “gap” to ever appear on futures markets this week.
Data from CME Group’s futures shows that on Friday, trading ended at around $23,825. Monday began with a wick to lows of $26,500 from opening levels, with the difference ranking as the biggest ever seen in a weekend.
These so-called futures “gaps” refer to the void between Friday and Monday trading sessions, and the BTC/USD spot price has a habit of returning to “fill” them later on.
In recent weeks, however, this trend has weakened, with gaps remaining between $16,900 and $19,500 which have only been partially filled.
This has in turn given rise to theories among analysts — including Cointelegraph’s Van de Poppe — that Bitcoin could still reverse downwards to revisit sub-$20,000 levels just long enough to take care of its unfinished business.
Should that not in fact occur, analysts may instead need to come to terms with the loss of what was once a solid indicator of near-term Bitcoin price trajectory.
On the topic of price trajectory, the latest action puts Bitcoin at odds with one of its best-known and most reliable price models — stock-to-flow.
After rising to hit exactly what the model’s demands last week, the weekend ensured that BTC/USD outperformed, with Sunday’s retracement to the mid $26,000 range ensuring compliance swiftly returned.
As noted by both its creator PlanB and Saifedean Ammous, author of “The Bitcoin Standard,” Bitcoin is overall staying highly faithful to what stock-to-flow requires on an almost daily basis.
“Bitcoin’s price continues to track the predicted value from @100trillionUSD ‘s stock-to-flow model with astonishing precision,” Ammous summarized.
Going forward, the model’s various incarnations demand price levels of anywhere between $100,000 and $576,000 between now and the end of the current halving cycle in 2024.
