Bitcoin Technical Analysis 

In the past few weeks, we have seen continued volatile price action from Bitcoin and other cryptocurrencies. With the outlook changing by the minute, we want to provide you with an updated look at Bitcoin. To give you the best information possible, we will take a look at the prospects for Bitcoin in the coming days, weeks and months. This analysis will include technical indicators such as moving averages, RSI levels, volume, and bollinger bands.

Our analysis will contain perspectives from the short-term to evaluate the coming hours to the long-term to evaluate the coming weeks and months.

Short-Term

For a short-term analysis on Bitcoin, we hope to provide you with analysis that will provide you insight as to what will happen in the coming hours and days with Bitcoin. This analysis shouldn’t be used as evidence for the long-term, but it could certainly help you find a good entrypoint if you’re looking to enter a trade either long or short on Bitcoin.

For the short-term view, we are going to look at a chart with 1-hour candles.

Bitcoin price chart - short term 

As you can see on the short-term chart, Bitcoin has been in an upward climb for a few days now, hitting the high of $14k a couple of times. This consistent climb comes after a drastic increase a few days ago. This pattern is very encouraging. With our trendlines, we can see a potential bull flag forming on this time frame. This view is fairly bullish for the coming hours and days.

Medium-Term

For those looking for a medium-term view of Bitcoin’s price action, we are going to take a look at a chart that uses 4-hour candles. This analysis should give you an idea of what is to come in the coming days and weeks.

Bitcoin price chart - medium term 

On the medium-term chart, we can see that we are actually nearing a potential resistance. We don’t consider this to be an insurmountable task for Bitcoin, but we could see a short-term consolidation. There are other signs that Bitcoin is headed for future consolidation, such as rising RSI levels. However, the bull flag pattern holds up in this view, so there’s no reason to be pessimistic about BTC on this chart. We would call this view neutral at this point.

Long-Term

Most people want to know what is going on with Bitcoin from a long-term perspective. For that view, we will be using a chart with 1-day candles. This chart will give traders an idea of what will happen with Bitcoin in the coming weeks and months.

Bitcoin price chart - long term 

On the long-term view, we see some very bullish patterns holding up for Bitcoin. BTC over the past few months did indeed go through a consolidation period in which the price dipped as low as $4k. Since then, it has strongly rebounded. We are currently at the previous high of $14k. If BTC is rejected at this price level, we could see a temporary consolidation, which would lend credence to a cup and handle pattern, which is incredibly bullish.

 

Bitcoin remains the undisputed leader of the cryptocurrency ecosystem, consistently outperforming all other coins and tokens that were conceived throughout the years in hope of emulating BTC’s success. The relation of bitcoin price movements to the altcoin market is well known to investors: smaller digital assets usually follow whatever bitcoin does, and the actions of BTC price are directly reflected in the sentiments among altcoin traders.

Uptrend Bitcoin price 

The current situation isn’t any different and bitcoin’s uptrend is significantly contributing to bullish sentiments predominant on the altcoin market. The BTC price has been consistently staying over $13,000 for some time, and over $13,500 for the past few days, which resulted in the price of other digital assets rising as well.

Performance of the altcoins 

Prices of the most popular altcoins have been following bitcoin’s example and gaining momentum over the past week. ETH, LTC, EOS, XLM, XRP, LINK, TRX, BCH, ADA and many others have been acting bullish. Of all the significant altcoins, Ethereum has been performing the best, quickly rising from a support level at $372 to over $395, possibly looking to find a new support at $400 if the bull trend continues.

Chainlink (LINK) has also performed well, rising from $10.80 to over $11.80. If a resistance at $12 can be broken, the price may possibly rise to over $13. The price rise for other assets such as BCH and XRP wasn’t as significant - the optimism among bitcoin cash supporters have been particularly short-lived and even the general optimism on the altcoin market didn’t manage to create a noteworthy uptrend for BCH.

The prices of less renown altcoins have also been growing. Digital assets such as NEO, AAVE, ALGO, RSR, COMP, OMG, ZRX, YFI, KSM, AMPL, UNI and many others have all increased in price by over 5%. Ocean Protocol (OCEAN) has seen a particularly major growth of over 15%, which caused the token to break a significant resistance level of $0.5.

Expectations for the Bitcoin price 

When it comes to BTC price, the short term support is likely to establish around $13,500 or even $13,650. Both the fundamental analysis and technical indicators are giving the investors many reasons to be bullish, so the price is expected to soon break the key resistance at $13,850. As the uptrend is anticipated to continue, the price rising over $14,000 again is quite likely in the foreseeable future.

Bitcoin’s massive bull run in 2017 has caused the altcoin market to bloom, and a similar situation is possible now. Since some analysts believe that the incoming BTC bull run will surpass the previous ones and make bitcoin reach its new All Time High, altcoin investors also have reasons to be optimistic about the valuation of their portfolios.

Michael Saylor, CEO Microstrategy 

Image source under CC: Microstrategy 

Microstrategy, a billion-dollar NASDAQ listed tech company that provides software-based solutions for mobile platforms and cloud computing is now investing a lot in Bitcoin. The CEO Michael Saylor has now stated on Twitter that he owns $240 million in the cryptocurrency personally. This announcement comes after Microstrategy announced an entrance into the world of cryptocurrency investing and bought more than $425 million in Bitcoin in Q3 of 2020. 

Dawn of Institutionalized Investment in Bitcoin?

Gone are the days when big tech CEOs and investors are warning people against investing in cryptocurrencies. Instead, more and more regular investors are looking to consolidate their positions in the industry and are investing in Bitcoin more than ever before. Just a few years back even when Bitcoin was hovering around record levels, big businesses were reluctant to invest in the sector because of fears of volatility and instability of the emerging sector. Executives of big banks were especially known to be vocal against investing in Bitcoin and there is a long list of prior statements that show this previously held bias. This happens every time a new disrupting force is brought to the market that can change the status quo. 

In the words of great inventor Nikola Tesla:

“All that was great in the past was ridiculed, condemned, combatted and suppressed only to emerge all the more triumphantly from the struggle”

So, cryptocurrencies after years of being ridiculed and condemned are starting to emerge triumphantly from the struggle for financial independence and inclusivity. There are several large companies and investment groups that have invested a considerable sum of money since the start of this year alone. 

Who has Invested the most in Bitcoin?

Square, a payments platform purchased $50 million worth of Bitcoin a few months ago, Japanese and Norwegian governments’ national pension funds have also reportedly invested hundreds of millions of dollars into Bitcoin. But, by far the largest investments have come from Microstrategy and Grayscale, with the former investing around $425 and the latter in excess of $1 billion till Q3 of 2020. 

While the news regarding Microstrategy’s foray into Bitcoin was made public a while ago, the CEO of the company has now come forward and stated that he himself owns $240 million in Bitcoin in a personal capacity. This shows us that how he trusts the cryptocurrency and is willing to hold such large amounts of it to help bring considerable rewards in the near future. 

Saylor himself tweeted:

“Some have asked how much BTC I own. I personally hodl 17,732 BTC which I bought at $9,882 each on average. I informed Microstrategy of these holdings before the company decided to buy bitcoin for itself”

The tweet was both an acknowledgement of the sector and an assurance to investors of his own company that he had total faith in Bitcoin and he is putting his money where his mouth is. The good news is that when the company bought the $425 million Bitcoin, the price index was hovering around $11,000 and now it is around $13,700 at press time. Saylor has also stated that the company wants to hold the asset for more than 100 years. 

This shows that the company’s assets increased to $514 million in a matter of months. No other asset has been this rewarding despite the stock market posting record growth in recent times because of a government-sponsored bailout package for the sector during the Coronavirus pandemic. The cryptocurrency is still posting considerable growth despite the cooling stock market situation. 

Verdict

The cryptocurrency sector especially Bitcoin is an inflection point. Data shows that interest in the sector and big investments will result in considerable appreciation of the sector in the future. However, analysts disagree when exactly it will happen. The recent Bitcoin price jump from $10,000 to $13,500 represents a growth of over 35% and some analysts believe this is it and the cryptocurrency will really take off from here. However there are some hurdles that remain and the cryptocurrency will need to overcome them in order to continue the trajectory upwards. If more and more companies start to hoard their wealth in crypto, then the upwards move will continue on for sure.

United States presidential election 

Image source under CC: flickr.com

The US elections are just a day ahead of us and there are considerable challenges faced by the country this time around. While it is up to the American public to decide what kind of leader they want to choose from, the aftershocks of the election are usually felt around the world. The Bitcoin price index is also expected to be influenced because of this year’s election. But, how will it respond to the developments across the Atlantic? Will Bitcoin holders see their worth increase or decrease during this exercise? Let us discuss!

The Uncertainty around 2020 Elections

Without getting into the politics of things, it is expected that this electoral process will be a more volatile transfer of power than ever seen in the American history. This is true especially considering the uncertainty surrounding the results declaration process that might take a long time because of record mail-in ballots and the slow overall counting process. One candidate in particular, the incumbent Donald Trump has even cast doubts about whether he will be willing to accept the election results altogether. While overall, Joe Biden, the democratic challenger is leading in the polls, the election could go to the wire and the country’s top judicial body, the Supreme Court may even have to be involved. All of this might take a while and we might not see who is the winner for potentially a long time, possibly for a month if the losing candidate is unwilling to concede. 

How are other Assets Responding?

The stock market is already being cautious in the buildup elections and has lost up to 5% 1-2 days before election night. The USD is also extending its losing streak against other fiat currencies of the world and that is adding selling pressure on the markets. The Gold/USD index is creeping upwards and touching around $1900 per ounce at the time of writing. While it is still short of the record set back in August of $2070, it is expected to rise sharply as well if the crisis is prolonged over time. Gold being a safe haven is going to be the buyers’ ultimate choice in the case of this man-made potential disaster. 

Overall, we might only have 36 hours before election day starts but there is still plenty of time to trigger a collapse. The way things are going with an uncertain outcome, these traditional assets are showing mixed results with safe havens increasing their worth while more volatile assets like stocks going on a small losing streak. 

How will the Bitcoin Price Index Respond?

Currently, the Bitcoin price index has lost around 3-4% during the last 48 hours. Many analysts blame this hiccup on the upcoming US elections. However, many also believe that the cryptocurrency is consolidating around the $13.5k level before taking down the long-term resistance of $14k once and for all. So, there are mixed perceptions around the effects of the election on the cryptocurrency price index. 

However, the elections may affect the Bitcoin price decisively if the results are contested or they drag along possibly over a month. The reason is that the US citizens are among the highest number of crypto holders around the world. If the election results are not going in the spirit of democracy, citizens will panic and start shifting their wealth to safe havens and assets just like it was witnessed in the start of the global pandemic back in March this year. Gold, weapons, rations, etc are generally considered the choice assets in the United States in the event of a crisis and these things may need cash so citizens will look to liquidate their positions and head to the stores for stockpiling. So, the Bitcoin price index may suffer a little dip due initially as the public panics. However, if the election drama plays out, the cryptocurrency’s price index is expected to recover strongly and then start posting massive growth as people flip assets trying to buy the ones that will prove to be useful in the future. 

Will the Price Index not Respond this Way?

All of this may not happen at all if it is all over at election night and there is a clear winner and the loser concedes. In that case, every major asset may experience a slight uptick including cryptocurrencies themselves. However, it is increasingly unlikely that this will not happen this time around due to petty fights and the never-back-down attitude adopted by both major candidates. 

bitcoin has little correlation to other assets 

Despite earlier concerns that Bitcoin’s price index tends to relate with other assets like the stock market or forex, recent study by Fidelity Digital Assets shows that Bitcoin has almost no relationship with these legacy assets. In a lengthy report titled Bitcoin Investment Thesis: Bitcoin’s Role As An Alternative Investment, the financial analysis company gave a detailed assessment of this finding and came to a rather surprising conclusion.

Bitcoin’s Historical Pattern of Correlation

Now cryptocurrencies especially Bitcoin have been blamed for being too unpredictable and volatile, even more so than regular asset trading like stock exchange, forex, commodities, etc. It is also assumed over the years that Bitcoin has had at least some connection with the stock markets because as recently as March 12-13, the sector tanked and shed a lot of its value and the same happened with the traditional markets like stock exchanges too. It also recovered quickly just like the markets themselves. Historically, the cryptocurrency’s proponents have desired that instead of this volatile area, Bitcoin be coupled with the likes of more stable safe havens like the bullion market with Gold. But, on closer inspection, this connection hasn’t been exactly proven over the years.

According to the report:

“Bitcoin’s correlation to other assets from January 2015 to September 2020 (displayed in the table below) is an average of 0.11, indicating there is almost no relationship between the returns of bitcoin and other assets.”

What does a Correlation of 0.11 Mean?

In analytical terms, the figure 0.11 is extremely low and shows little or no correlation between the two assets. Typically, the association is shown by this figure which is usually between 0 and 1 with 1 showing direct correlation or relationship. The number 0.11 is very low and shows that despite some correlation at odd points in history, the two asset classes have largely diverged over time. 

However, the report does say that despite low association with other asset classes, it is pertinent to mention that it may develop such associations in the future:

“Bitcoin is a young asset that, until recently, was untethered to traditional markets…., as it is integrated in institutional portfolios, it could become increasingly correlated with other assets.”

Bitcoin has Better Rewarding Potential than other Assets

In addition to this groundbreaking finding, the report also showed that the cryptocurrency sector is much more rewarding for investors overall when compared to these other traditional instruments. 

According to the report:

The report also highlighted the salient features of Bitcoin that made it a very desirable asset, especially in the long-term. It also mentions that the cryptocurrency is seen by different investors in a different light. Some believe it to be a safe haven, others like to day trade on it while still others think it is a swing trade option. This variety of opinions regarding Bitcoin is a plus and means that it will appeal to a much wider demographic overall.

Verdict

The report of Fidelity shows that Bitcoin is not like it seems when it comes to correlation. The existing viewpoint that the cryptocurrency is tied to conventional assets is being challenged with analytical tools. With this paradigm shift in perception, it is expected that Bitcoin will have a stronger image for the future, one that doesnt rely on validation from existing asset.