The first and largest cryptocurrency, Bitcoin (BTC) had its upside move extended on December 27 to highs of $28,337. However, the lead crypto was unable to sustain the tremendous upside traction as its price saw a rapid rejection. Bitcoin met intense selling pressure above $28,000 which led it plunging to intraday lows of $25,772 subsequently.
While questions of what next seems to be propping up for the crypto asset, it is noteworthy to mention that this current rally has put Bitcoin back on the path plotted by the Stock to Flow (S2F) model, which predicts a price of $100,000 by December 2021.
Bitcoin also set new record highs in this recent rally surpassing a $500 billion market cap for the first time.
BTC/USD Daily Chart
At the time of writing, Bitcoin is consolidating at $26,222 while awaiting the next major move.
Litecoin, the 5th largest cryptocurrency by market cap has been mirroring Bitcoin’s trade recently. The historical significance of Litecoin (LTC) is considered because when a rally begins, its momentum usually lasts longer than other lesser-known, smaller-cap Altcoins. Historical data also indicates that LTC tends to move in tandem as BTC goes through bullish and bearish cycles.
While traders and analysts await BTC’s following move, positive headwinds are swirling for Bitcoin’s next step with some clamoring for a $30,000 Bitcoin price. Some analysts believe Bitcoin could rise to either $30,000 or $36,000 based on the options market. Binance order book data however indicates that a massive supply wall at $30,000 may constitute a roadblock for BTC bulls.
On the other hand, an analyst believes that the level where this rally could top in the near to medium term is $28,000 to $29,000. He noted that Bitcoin’s relative strength index (RSI) reading is presently at 2017 highs, which may suggest overbought market conditions. It may not be a likely signal for a possible correction but it may indicate that investors should be cautious on longing BTC.
A pseudonymous trader “Byzantine General” said that he foresees Bitcoin topping out at $30,000. He noted that $30,000 has sell orders on Coinbase and Bitfinex.
What This May Imply for Bitcoin and Litecoin
A trader with the moniker “crypto squeeze” noted that the largest gap in Bitcoin futures markets ever created could be seen on Monday, December 28. Bitcoin’s break at $28,347 may signal the turn of retail buyers to fuel the next phase of the Bitcoin rally. As the next logical top for Bitcoin is likely to be when institutional buying of Bitcoin slows down.
If corrections occur on BTC price, retail investors can start buying the dip and institutional investors accumulate later.
Analysts at Whalemap noted that in terms of whale activity, BTC has formed strong support in the $23,000 to $23,500 range. It was further noted that BTC needs to stay at $24,000 as the critical support area to avoid a massive decline.
Michaël van de Poppe stated “The bull cycle of bull cycles has started, as more and more players are starting to adopt towards Bitcoin and cryptocurrencies,”
Although some analysts believe that the Bitcoin rally is bearish for Altcoins, BTC sucks out the volume from the market. However, Litecoin has been one Altcoin that surged in tandem with Bitcoin buoyed by technical and fundamental strength.
John Kim, a Litecoin Foundation member recently highlighted this:
“Zero Downtime, 100% Uptime; King of Scrypt with 98% dominance; Over 500 B transacted on its network; Segregated Witness before #BTC; Time tested & proven; One of the most liquid and on about every exchange; 2nd place at ATM’S; MimbleWimble.”
Whether Bitcoin’s consolidation will buoy the Altcoin market’s prospect as seen in the recycling of profits in the near term remains to be seen, with analysts having mixed opinions on when an ‘Altseason’ may emerge.
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