Leading RoboForex analyst RoboForex Dmitry Gurkovsky discusses possible further scenarios for Bitcoin’s price movement.
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Bitcoin prices are again displaying a bearish correction. Buyers lack the strength to break through an important resistance. The next critical support area is the $16,200 level, a break of which could trigger a reversal pattern called the “Double top” and indicate a continuation of the asset’s decline.
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However, there are positive signs for completing this correction and starting a move higher. First, another US stimulus package could be adopted, allocating an additional $916 billion for these purposes. Such a step could put additional pressure on the already-weak U.S. dollar and would also spur investors to invest even more in “safe-haven assets” such as Bitcoin and gold. Experts note that at present Bitcoin acts not as a daily payments instrument but rather as a store of value and a vehicle for transferring accumulated savings.
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In January 2021, the private German bank Hauck & Aufhäuser will launch a crypto investment fund. This will allow institutional investors to gain access to digital assets such as Ethereum and Stellar. This step again confirms that there is strong demand for cryptocurrencies from institutional investors worldwide.
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On the other hand, PayPal CEO Dan Schulman is confident that the healthy development of the crypto industry is not possible without close cooperation with regulators. According to him, PayPal has spent a substantial amount on regulatory compliance, and has also become the first company to receive a conditional license from New York’s financial regulator.
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On the daily chart, Bitcoin price is again testing the fast moving average. The previous test ended with an all-time high, so the current price action should be seen as merely a bearish correction before another attempt to rise. The key support levels are $16,500 and $16,200.
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Daily BTC/USD chart for Bitstamp from TradingView.
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Attention should also be paid to the RSI indicator’s behavior. Previously, a drop below the 30 level signaled the end of the downside correction and the continuation of the bullish impulse. A strong signal in favor of breaking the all-time high would be RSI readings staying above the downtrend line.
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4-hour BTC/USD chart from Bitstamp on TradingView.