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After the recent rapid rally, the bitcoin (BTC) market is expected to take a break before continuing its ascent towards the end of the year, analysts told CoinDesk.
“Cryptocurrency may consolidate for a short time before going back up to Christmas,” said Chris Thomas, head of digital assets at Swissquote Bank.
Indeed, further notable gains seem unlikely in the near term, as the cryptocurrency’s 60% rally from $ 9,800 to $ 15,900 over the past two months appears to be overloaded, according to technical charts. The 14-day and 14-week relative strength indices are hovering well above 70, indicating overbought conditions and margin for consolidation or a slight pullback.
Echoing Thomas’ comments, Patrick Heusser, senior cryptocurrency trader at Zurich-based Crypto Broker AG, expects bitcoin to consolidate in a range of $ 14,000 to $ 16,000 in the coming weeks. However, he expects the break to allow a rally in alternative cryptocurrencies, most of which have fallen behind bitcoin in the past two months.
Others suggest that bitcoin could go towards more than consolidation. “Bitcoin is overbought after breaking through critical resistance at $ 14,000, which suggests we may be seeing a period of correction and consolidation,” said Joel Kruger, currency strategist at LMAX Digital.
Historically, bitcoin saw multiple pullbacks of more than 20% in previous bull markets. This time around, however, a large drawdown looks likely, as liquidity on the sell side appears to have dried up with increased institutional stake and strong investor ownership sentiment.
While observers are divided on whether prices will consolidate or pull back in the near term, there seems to be a consensus that bitcoin’s long-term outlook is bullish, with some predicting a retest of the all-time high. $ 20,000 by the end of December.
“We expect near-term volatility accompanied by even more powerful uptrends, flirting with $ 20,000 before the end of the year and, if the stars align, between $ 50,000 and $ 80,000. by the end of 2021, ”Jehan Chu, co-founder and managing partner at Hong Kong- based trading company Kenetic Capital, said CoinDesk. Investor sentiment has never been better, Chu added.
Thomas of Swissquote also expects a weaker dollar and political uncertainty in the United States to propel bitcoin higher in the long term.
All things considered, bitcoin is likely to maintain its overall upward trajectory. “Look for the market to settle above $ 20,000 in 2021 before the next major extension upward in the $ 30,000 to $ 40,000 range,” Kruger said, adding that “any major setback should be fine. supported above $ 8,000 ”.
Bitcoin’s upward momentum has stalled since prices hit $ 15,971 on November 6. At press time, the cryptocurrency is trading at close to $ 15,665, which is a 2.3% gain on the day, according to CoinDesk’s Bitcoin price index.
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