Bitcoin fell during the week ending January 10th, initially rallying to just under the current ATH around $42K before pulling back to the $36K and eventually settling the weekly candle just under $38K. This is a bearish candle indicating a possible topping formation and a shift in market sentiment as we've fallen off nearly 20% from the ATH only to recover about half of the losses as we head into a new week with lots of volatility abound.
(January 10, 2021 7:30PM EST)
Outlook: Bitcoin sold off a bit last week, finally experiencing some selling following an enormous parabolic run dating back to October in which Bitcoin quadrupled in price. As I've been saying for the past week or so, though these vertical market parabolas seem invincible and everlasting, no market is capable of sustaining that degree of bullish (or bearish) price action for long.
Accordingly, it appears we're about to see Bitcoin start to revert back to the mean, which is probably in the low $30,000's or high $20,000's. Seeing as how Bitcoin tends to make exaggerated moves in both directions, I think a moderate retracement here makes sense, probably down to at least the 38.2% Fibonacci retracement level at ~$28K (as shown in the weekly chart above) or more likely the 50% fib down to around $25K where an army of buyers will be more than happy to step in and buy the dip.
Of course, Bitcoin could go lower than that, possibly spiking as low as $20K, which technically would be very clean as a test of previous resistance turned support, though I suspect there will simply be too much buying pressure once Bitcoin breaks below $30K and then $25K to let the sellers take us that low. Given what we've seen from Bitcoin historically and now again 2020-2021, why would anyone short Bitcoin, especially when it's in a clear uptrend and shorting at 50% of the ATH?
As far as price targets go, I think it's only a matter of time before BTC hits $50K, $75K, and then $100K, the first of which we will almost certainly see in H1 2021. Now, based on my traditional market and equity analysis, equities have gotten extremely overbought to the upside and are due for a significant correction in the immediate future which I suspect will likely have a collateral effect on Bitcoin and the greater crypto space's prices which are already starting to tumble a bit. That being said, I think any such correction will be a fantastic opportunity to buy the dip and medium-long term value as Bitcoin resumes higher to end 2021 and enter 2022 with eyes on $100K. Anyone with an eye to the future would be wise to buy Bitcoin on dips or even earn Bitcoin however possible before it's too late/expensive.
A lot of people aren't aware of how institutional investors and hedge funds work, but because they have a lot of compliance, risk management, and quarterly earnings that keeps them honest, many institutions are unwilling or unable to invest in asset classes (crypto) which small market caps (crypto in 2019). What does this mean? As Bitcoin gets bigger / more expensive, more funds can justify or even meet the base criteria for taking initial Bitcoin positions. In other words, the biggest Bitcoin and Bitcoin's market cap get, the more institutional investors will buy-in.
Support: Look for support around the $30K level, then the 38.2% fib at $28K, 50% fib at $25K, and my absolute floor is $20K at this point, though I doubt Bitcoin will retrace almost 50% all the way to touch that level given the level of bullishness currently flowing throughout the market. I think a pullback to $25K is more reasonable and will provide a healthy discount to what will almost assuredly an exponentially higher future valuation.
Resistance: Look for resistance at large, round psychological numbers in $5,000 intervals: $35K, $40K, $50K, etc. I imagine $50K would be strong resistance, although the bigger Bitcoin gets the more legitimacy it gains = more institutional investors can justify taking initial positions.
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