Bitcoin fell again on Monday, going back and forth during the trading session in a ~$4,000 range between $31K and $35K before ultimately closing the daily candle around $32,500. This is a slightly higher low from this weekend's thinly-traded candle, although that doesn't mean much. Bitcoin continues to look weak and print lower highs, which leads me to believe Bitcoin is likely to continue grinding lower.
(January 25, 2021 7:30PM EST)
Outlook: Bitcoin continued lower on Monday, putting in a lower high and continuing to look weak throughout the day with rallies being faded. This looks like a market that is correcting downward on slightly less volume towards support, which is approaching the lower we get. I'm not sure Bitcoin will have any significant $5,000 - $10,000 red candles at this point, though it could, but rather I think Bitcoin continues to drift lower until it finds support and appears to be putting in a bottoming pattern. My opinion based on the daily chart above is that Bitcoin is probably halfway through reverting back to the mean if not more, seemingly targeting the mid-to-high $20,000's. I think a moderate retracement here makes sense, probably down to at least the 38.2% Fibonacci retracement level at ~$28K which we nearly grazed this weekend and coincides with the rising 50 Day EMA just below, or more likely the 50% fib down to around $25K where an army of buyers should be patiently waiting, myself included.
In the meantime we're just playing the waiting game, continuing to DCA with small amounts on a weekly basis. It may seem expensive now but if the multiple longer-term models such as the Bitcoin Stock-to-Flow Model (S2F) below is of any indication of where Bitcoin is likely to head from here, it's up and by a lot. That being said, I think adding small amounts of Bitcoin here and especially on dips as well as even finding ways to earn Bitcoin however possible is a wise move before it's too late/expensive. By looking at the updated S2F model below, you can see the model portends Bitcoin will be valued at over $100K at the peak of this cycle, which we are rapidly approaching.
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. As you can see in the updated Stock-to-Flow model above, I think Bitcoin recovers in the short-term back up to the current ATH to test the ~$42K level, parries a weak technical rejection, and then breaks higher to continue to $50K where Bitcoin will achieve the $1 Trillion market cap for the first time.
Support: Look for support around the $30K level, which is under pressure and has already been breached once, then the 38.2% fib at $28K, 50% fib at $25K, and I'm essentially ruling out $20K at this point. I think a brief 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: $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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