The price of Bitcoin has risen 30% in a week, reaching $ 23,777 yesterday. Due to the possibility of bitcoin prices entering the consolidation phase, a number of altcoins are ready to move to higher levels.
To Report Coin Telegraph Christopher Wood, head of stock strategy at Jefferies Investment Bank, has drained five percent of his accumulated capital in physical gold to buy bitcoins. With these interpretations, a growing number of institutional or corporate investors see bitcoin as a better value or store of gold. Wood also acknowledged that if Bitcoin were to undergo a major price correction, the company’s capital injection into Bitcoin would increase. The fact that institutional investors enter the market in the range of $ 16,000 to $ 20,000 indicates that these individuals are not worried about the return on their investment, but rather see these reforms as an opportunity to accumulate their position in the long run.
One River, a digital asset management company, recently announced a $ 600 million investment in Bitcoin and Ethereum. The company’s CEO, Eric Peters, also announced that the hedge fund plans to increase its asset allocation to $ 1 billion in the first half of next year. With these interpretations, the likelihood of organizational demand for investment in digital assets will remain high until 2021.
On the other hand, Nigel Green, the founder and CEO of deVere Investment Advisory Group, expects Bitcoin to continue to rise in 2021, as the rally will be supported by the influx of some of the world’s largest organizations. He also expects the price of bitcoin to increase by at least 50 percent or even double next year. However, not everyone is certain about the future of Bitcoin. Mark Cuban, an American billionaire entrepreneur, believes that it will be unlikely that Bitcoin will be replaced by traditional currencies or Fiat in the near future.
Before we begin the discussion of technical price analysis, let’s take a look at the blueprint for the formation of a price bubble in any financial asset published by Dr. Jean-Paul Rodrigue. This chart is a psychological field guide to the price bubble life cycle in financial markets.
Here we describe the price awareness phase, but given the importance of understanding these cycles, we will describe all of them in detail in a separate article.
The description of this phase states that a well-anticipated fundamental news and monitoring event acts as an accelerator to raise prices to levels not seen since the early days of the bearish market. In Bitcoin, this previous price level was at $ 20,000.
Emotions and thrills on social networks are on the rise. These are overwhelming emotions, self-confidence, excitement and a great promise for the future.
Price has increasing growth cycles and corrects in the same way in similar cycles. In this phase, several growth cycles are left behind and finally the last historical price ceiling is taken back. People who have bought bitcoins at this level in the past (2017) are relieved of the burden of losses and reduce the selling pressure in the market.
The urge to discover the price begins. FOMO, or the fear of being left behind among small investors, is mounting, and the financial media is on fire. In the first 100 days of price discovery, bitcoin is worth about twice its value. Shortly afterwards, Bitcoin exits its logarithmic channel. You will see this channel in the continuation of the analysis. But first we go to examine the interesting and precise price movements according to the technical analysis of the past.
In this analysis, dated December 11, at the price of $ 18,100, we mentioned that if the rising momentum of the price takes a fresh breath and quickly raises the price above the resistance area of $ 18,500 to $ 19,000, this can be a confirmation stamp. Triangle pattern targets are seen at $ 19,790 (point C) and $ 21,780 (point D).
Finally, we said that according to this model and its goals, we can get up to $ 19,790 (point C) and At least Ten percent above this point, up to $ 21,780, we can expect the price of Bitcoin to grow. The chart below shows the current price situation.
See how accurately and beautifully these movements have taken place from the history of the past analysis to the present situation, and have even gone above and beyond these goals. So even in the face of confusion, the height of market excitement, and despite price fluctuations around the historic ceiling, we have seen how technical analysis has been our beacon.
Now we come to the part where we talk about the middle ground. In the weekly time frame, we draw the logarithmic channel mentioned above and check its validity with the quantity and quality of the price response (green and red arrows) to its various levels, including the middle channel.
According to the bubble life cycle model, up to the next 100 days, ie until March 24, 2021, the price of Bitcoin is likely to rise to $ 40,000. With this move, it may bring its price back to the middle channel of this channel. Of course, in the description of this model, reference is made to the exit of the price from the logarithmic channel, which, considering its staggering goals, seems a bit far-fetched at the moment.
At the same time frame in the logarithmic chart, if we pay attention to the price situation, we will notice its impact on the new channel medium. This warns of the possibility of a return and price correction. On the other hand, this move does not negate the possibility of fluctuations above current levels. These fluctuations in the coming weeks may be seen as candle wicks in this time frame.
Now, if we move away from the long-term perspective and refer to the one-hour time frame, according to the price movements (price action), we see the Three Drive pattern.
We have seen this pattern in the price of bitcoin in the past. To see an example of this pattern in the price of Bitcoin and its full description, refer to the relevant analysis. However, this pattern represents the short-term target of $ 24,470 in bitcoin, after which we expect the price to fall. The Relative Strength Index (RSI) is also showing consecutive negative divergences (-RD).
The final suggestion is to control your risk in the trades by optimally adjusting the loss limit, and manage your capital by entering and exiting a step in support and resistance. If you do not have enough knowledge to trade, refrain from entering trades and gradually learn this knowledge by referring to the market analysis training section. This analysis should not be considered as a signal to buy or sell.