Bitcoin (BTC), which is starting a new week, begins on familiar ground below $50,000. But there are signs that major disruptions will soon begin.
BTC/USD has been rejected after a new push over $50,000. This keeps traders guessing until the last about near-term price action, including the close of the year.
Only two weeks remain for the blow-off tops that characterized 2013 and 2017 to be repeated, but all on-chain metrics point to upside.
Cointelegraph looks at the potential for investors with 90% of Bitcoin’s supply now officially mined.
Similar, but different?
Sunday saw a new push for $50,000 and higher, but it didn’t hold, according to data from TradingView and Cointelegraph Markets Pro.
BTC/USD 1-hour candle charts (Bitstamp). Source: TradingView
It’s a well-known story that is familiar to market veterans.
“53K has also been my line in sand. “Flip that, and we’re back to business,” William Clemente, analyst, reiterated.
Although Bitcoin is still a sub-$53,000 asset, there are many opinions that do not worry about the unpredicted sideways nature this quarter.
TechDev, a popular Twitter account, says that Bitcoin “rhymes with” previous bull cycles years. It seems very similar to Q4 last Year — just before BTC/USD started its ascent.
#BTC Weekly There is as good a reason to be bearish as in late 2020, just before the first major leg. pic.twitter.com/62AptElE2G
— TechDev (@TechDev_52) December 13, 2021
PlanB, who created the stock-toflow BTC price models was also optimistic. He uploaded a picture of one of his forecasts and argued that Bitcoin was actually in an extended consolidation phase for the majority of the year.
He said, “Patience and perseverance are key.”
Bitcoin stock-toflow vs. BTC/USD chart. Source: PlanB/ Twitter
Taper or not?
This week’s macro trigger is the Federal Reserve, and its next announcement about the state of its asset acquisition program.
The Federal Open Market Committee (FOMC), meeting could offer valuable insight into the future of quantitative ease (QE) as well as the speed of “tapering” asset purchases.
The Fed must balance the inflationary environment with the risk of Coronavirus outbreaks. This makes it difficult for the Fed to be credible in deciding which policies to adopt.
Cointelegraph reported that some see the meeting as more disruptive than the Consumer Price Index (CPI), which last week showed the highest U.S. inflation since 1982.
“Despite the uncertainty created by the emergence Omicron variant, there is no opposition to the Fed’s decision to accelerate QE tapering. Next week’s meeting will see the Fed announce a acceleration in QE tapering with a $30bn reduction in January (to $60bn in purchases) and a further $30bn reduction February,” a note by ING was last week.
“This would mean that the Fed would wrap up the program by March 1, leaving the Federal Reserve with $8.8tn assets on its balance sheets – more than twice its pre-pandemic January 2020 level!”
Chart of the Fed’s balance sheet. Source: Federal Reserve
Major QE changes can effectively change the availability of “easy money”, according to Arthur Hayes, BitMEX’s former CEO. This has knock-on consequences for risk assets like Bitcoin.
nalyst Cole Garner says Bitcoin is’ready’
It is no secret that the on-chain indicators have held strong despite spot prices falling nearly 40% from their all-time highs.
More metrics are now joining the fray, giving analyst Cole Garner serious faith in “greener days” ahead.
The well-known statistician, who posted several charts in a series on Twitter over the weekend, was clear that he is now bullish.
He stated that he believes BTC is ready and gave a summary of the outlook for BTC/USD.
“Suddenly, all my favorite leading indicators are lined up long and strong.”
The most prominent signal was from OTC trading desks. The BTC balance of these entities saw an abrupt increase last week, which corresponds to clients buying.
OTC is not always in line with price increases but Garner considers it a “powerful alpha”
“One of my favorite leading indicators. He wrote that it made intuitive sense the more you think about it.
“It’s gone, and it’s flipped full-bull.”
BTC/USD vs. OTC Balance annotated Chart. Source: Cole Garner/Twitter
Another indicator is the combined volume delta (CVD), which Garner calls a bull sign. It slopes upward for Bitcoin whales.
CVD is used for determining the market’s ratio of buyers to sellers. Its data indicates that buyer interest remains strong at present levels.
He said, “This metric evolved to be my main indicator, over time,”
“It doesn’t lie.”
BTC/USD vs. Whale CVD annotated Chart. Source: Cole Garner/Twitter
Not everyone was convinced. Responses suggested that the spike OTC numbers could just be that, a short divergence in an overall downward trend. Others believe that Bitcoin must end 2021 with a bang, consolidating slowly on the way back to the upside in 2019.
Bitcoin ETFs increase their reserves
In keeping with a past trend, institutional investors are not showing any signs of abandoning BTC as a risk asset in current conditions.
New data has revealed that ETFs are busy building wealth despite OTC concerns.
The Purpose Bitcoin ETF was Canada’s first licensed spot ETF product. It added 4,342 BTC in December to its reserves, an increase of 17.6%.
With 28,974 BTC, Purpose now shows what many have been arguing all year: that Bitcoin exposure for institutions is a tide, and must be addressed sooner or later.
Chart showing the purpose of Bitcoin ETF holdings. Source: Coinglass
“That’s only one ETF,” Lex Moskovski (CIO of Moskovski Capital) stated.
The U.S. denial of spot-based Bitcoin ETFs is a contentious issue, and industry representatives as well as lawmakers continue to press regulators to clarify their position.
“Can anyone explain…why Fidelity Investments (one of America’s most well-known investment advisors) had to travel to Canada to offer an ETF? Or why physical-settled crypto ETFs can be legal and safe in Germany, Brazil and Singapore but not in the United States? Last week, Brian Brooks, BitFury’s CEO, testified before the Senate Committee on Financial Services.
The market may not know what it should think.
Related: Two key indicators that the Bitcoin price has bottomed in trading Bitcoins
The Crypto Fear & Greed Index shows that changes in Bitcoin’s overall price rangebound activity can upend or down the mood by a matter of a few thousand dollars.
Crypto Fear & Greed Index. Source: Alternative.me
Recent weeks have seen Fear & Greed return to the forefront thanks to the unexpected nature and impact of the BTC decline.
Last week, it reached its lowest level since July, at 16/100, or “extreme fear”. It then nearly doubled to 28/100 in one day before falling back to 16 and then climbing to 27 over the weekend.
BTC/USD traded in a range of approximately $4,000.
Analyst William Clemente laughed alongside a chart that showed sentiment reactions to price movements.
Annotated chart of BTC/USD Source: William Clemente/Twitter
TechDev noted, however, that sentiment is still lower at the beginning of the year than it was at the beginning. Bitcoin opened at $29,000 at the time.
Its relative strength index (RSI) is a key metric that highlights overbought or oversold phases in an asset at a given price point.
TechDev said that this is a sign of a “big bullish divergence”.