Bitcoin erupted higher on Monday, rallying vociferously to erase last week's losses and reaching up to the ATH around $20,000, reaching a new ATH and grazing about $19,900 before pulling back a bit into the close. This is extremely bullish and a bullish engulfing candle.
Outlook: Bitcoin had a monstrous start to the week, erasing all of last week's losses and more, rocketing up to just under the $19,900 level, reaching a new ATH for the first time in nearly three years. This comes as Guggenheim Investment disclosed in an SEC filing that its Macro Opportunities Fund possesses the right to invest up to 10% of its NAV (Net Asset Value) in Grayscale Bitcoin Trust (GBTC). The Macro Opportunities fund manages roughly $5.3 billion in assets, equating a 10% investment to be about $530 million. This news comes as no surprise to those who have been in crypto for a few years, as believers knew this day would come. However, it is interesting to note how Bitcoin had a record day, yet there is no mania to be seen -- in fact, not even close. It begs the question: At what point will the media attention return? Will it be $100,000 Bitcoin? Governments buying Bitcoin? FAANG giants like Amazon accepting crypto as a payment method globally? What's becoming more and more clear is that those days are coming, we just don't know when. However, fundamentally, everything is on course as expected, at least by believers.
Technically, I'm not convinced Bitcoin won't still find trouble around these heights as it failed again to break above the $20,000 level, which is clearly a large, round psychological level. We all remember how resistive $10,000 was, and that wasn't even a historic ATH. I think a retracement makes sense, so I'm not a buyer at these levels, but I think a bit of FOMO is sinking in so value-hunters will be on the lookout to buy dips.
That being said, I'm not a seller of Bitcoin, but I am a buyer on dips and actively looking for value underneath as Bitcoin pullbacks for a medium-longer term timeframe. I think a pullback will put in a higher low as it has already obviously put in a higher high, and this will support a subsequent move up to breach the $20,000 level and above soon thereafter, probably in Q1 2021. For now, I'm a buyer on dips, looking for value after the sellers are exhausted at slightly lower levels, at which point I'll be happy to add to my stack for an extraordinarily bullish 2021-2023.
Support: Look for a first level of support around the 38.2% fib retracement at $16,000, which is about where Bitcoin pulled back to and found support last week. This would be a shallow pullback if it were to be 'the' pullback. More realistically, I'm looking for a retracement to the 50% or even 61.8% fib level, which would be roughly the $14,850 level or $13,670 level, respectively. This area makes a lot of sense and is a proportionate pullback in terms of percentage that we have seen so many times before.
Resistance: $20,000 remains firm resistance, which makes sense as it's the previous ATH. When BTC breaks above $20,000, which, may actually happen in shorter time than we had anticipated, I'll be looking for a quick run-up to $25,000 and then $30,000.
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