Bitcoin – The Market Wants To See The All-time High

Only three months have passed since the last short-term correction in Bitcoin at the beginning of September. Back then it was the last pullback slightly below US$10,000. In terms of price, however, Bitcoin has since then catapulted itself into another dimension as prices are currently trading very close to the all-time high of US$20,000. This means an impressive doubling within a few months. The expected strong performance even accelerated in recent weeks, so that numerous altcoins came back to life, too. Overall, the entire crypto sector is back in a bull market. 

The rally into another dimension began on October 8th and led Bitcoin prices within seven weeks from US$10,600 up to US$19,500 on November 25th. Since then, Bitcoin has been consolidating on high levels just below its all-time high at US$20,000. A top or even a trend reversal has not been observed. However, volatility has increased significantly and temporary pullbacks in the range between US$1,000 and US$3,200 are causing nervousness among the weak hands.

Technical Analysis For Bitcoin in US Dollar

Bitcoin Weekly Chart as of December 4th 2020, Source: Tradingview. Bitcoin - The market wants to see the all-time high.

Bitcoin Weekly Chart as of December 4th, 2020, Source: Tradingview

Nearly three years have passed since the legendary run to almost US$20,000. Back then, Bitcoin topped out just under US$20,000 and fell into a deep crypto winter, which mercilessly separated the strong from the weak among the investors and traders and likewise also under all the hyped “ICO projects” and cobbled together new crypto currencies. Now what is left after all the hype and and the deep correction is above all a much stronger Bitcoin, which is currently knocking at its all-time December 2017 highs long before almost all other altcoins.

On the weekly chart for Bitcoin, the zone between US$19,000 and US$20,000 therefore logically forms a strong resistance zone. Nevertheless, the perseverance with which the bulls have been able to hold around and above the US$19,000 mark for the past few days is impressive and clearly shows strength. Equally positive is the fact that Bitcoin was able to fight its way back over its multi-year upward trend line in October. However, anyone looking for the hair in the soup will find a heavily overbought stochastic oscillator on the weekly chart. The RSI has also reached very sporty highs. A somewhat larger pullback or a sideways consolidation for several weeks would therefore not be surprising and should definitely be planned for.

In conclusion, the weekly chart is bullish and in a clear uptrend. Basically, we have to assume that the uptrend will continue and even accelerate in the next step. However, the heavily overbought situation proves to be problematic. The risk/reward at current price level is rather miserable, as long as one does not assume at least a tripling of Bitcoin prices over the coming 12 months. Who however legitimately counts on six digit Bitcoin prices in the medium- to longer-term, can buy right now despite prices trading only slightly below the all-time high. Then in addition, however, one must bring along nerves of steel too, in order to be able to bear and get through possible huge pullbacks in the magnitude of 30-45% from current price levels. Speculative trading with high leverage on margin and without a safety net is prohibited in the current environment.

Bitcoin Daily Chart as of December 4th 2020. Source: Tradingview. Bitcoin - The market wants to see the all-time high.

Bitcoin Daily Chart as of December 4th, 2020. Source: Tradingview

On the daily chart, a meaningful uptrend channel can be defined with the corona crash low in March, the first recovery high in early May and the last low in early October. Thereby, Bitcoin currently consolidates around the midline of this uptrend channel or alternatively prepares for the breakout into the upper half of the channel. Depending on which scenario the market decides on, either considerable upside potential will be released rather soon or a pullback towards US$15,000 to US$17,000 is activated on the downside.

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Disclaimer: All published information represents the opinion and analysis of Mr Florian Grummes & his partners, based on data available to him, at the time of writing. Mr. Grummes’s ...

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