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- Stricter lockdowns in Europe and announcements by the Fed in the US could influence the price of Bitcoin (BTC) this week.
- Analysts are pointing out a high participation of investors taking profit at current levels.
After regaining the important range at $19,000, Bitcoin seems to be behaving as it has for the past few weeks: taking daily gains and then retracing. Accordingly, some analysts wonder if the recent price spike was a sustainable “weekend rally” or a bear trap.
At the time of publication, the price of Bitcoin (BTC) stands at $19,162 with a sideways movement in the daily and weekly graph. In contrast, the monthly chart is showing a gain of 17.60%. This places Bitcoin among the 5 currencies with the highest gains in the top 10, surpassed by Ethereum (23.42%), XRP (88.93%), ADA (43.74%) and Litecoin (24.20%).
Trader Michaël van de Poppe, known as “Crypto Michäel”, indicated that there are similarities between the current price hike and the previous months just before Bitcoin reached new highs. The cryptocurrency is at a “potential bullish” momentum, therefore, investors should look closely at the $19,600 resistance and expect a flip to support as the price rises to higher highs in the range near $20,000, as the analyst is showing with the chart below.
However, the trader also advised for caution in the coming days. There are key events that could negatively influence the crypto market. In Europe, new measures to control Covid-19 could have a similar, though smaller impact than what happened in March when the crypto market crashed massively. Investors may prefer to move funds to more liquid mediums of exchange, as van de Poppe said:
Regardless, I’m heavily interested in the price action coming week. Multiple concerns are surrounding the markets; Brexit negotiations, but also stricter lockdowns in Europe. Fear starting to take over and cash is king? We’ll see.
Also, trader AnnTrades noted that there will be major events all week in the US. The Federal Reserve is expected to make its final decisions for 2020, starting on Tuesday with a meeting of the Federal Open Market Committee (FOMC). The results of that meeting will be announced on Wednesday with a high probability that modifications will be made to the Fed’s asset purchase program.
Important events this week:
TUE: FOMC meeting starts
WED: FOMC announcement (2 PM EST)
THU:
Housing starts (8:30 AM EST)
Jobless claims (8:30 AM EST)
Philly manufacturing index (8:30 AM EST)
FRI: Quadruple witching$SPY $QQQ $IWM $TQQQ— Ann (@AnnTrades) December 13, 2020
In 2020, the Federal Reserve’s announcements have been extremely beneficial for Bitcoin. The unprecedented wave of adoption that the cryptocurrency has seen by institutions is based on an attempt to preserve wealth in the face of possible inflation in the dollar. MicroStrategy and Square have adjusted their treasury policies accordingly.
Bitcoin price trapped in a waiting game
On the other hand, Willy Woo has made a market update for the next few days. As the graph below shows, the “Spent Output Profit Ratio” is at a high level. This metric indicates that there is a large portion of investors who have decided to take profit at the current price levels.
Woo believes this will keep Bitcoin’s price moving sideways until early 2021 when “profit takers get exhausted”. This could happen if the Bitcoin buying pressure from institutions increases. A scenario that seems to be materializing, as Woo stated:
Once SOPR starts declining, profit taking begets profit taking. We wait until all investors in profit who are going to sell to complete their sell off, when this happens, coins moving no longer carry profit, SOPR goes to 1.0, and we can move forward. ETA January perhaps.
