The Christmas Wish List

Did you fill your crypto Christmas wish list? Santa may be happy to put some “cheap” Bitcoin under your tree this year, regardless if you have been good or naughty.

After many ups and downs, Bitcoin is on track to end the year, mostly in line with the average price it traded for the whole year. What to expect next?

Bitcoin price range in 2021

Let’s analyze the three possible scenarios.

Bitcoin keeps trading sideways.

That’s the scenario most of the traders would like to avoid. Uncertainty leads to dull price actions and lower returns. The good news is that you can capitalize on such situations by running Grid Strategies that take advantage of low volatility.

Bitcoin could enter a prolongued Bear Market.

Although this is the less likely scenario at the moment, you should always expect the unexpected. Historically each crypto bull cycle has ended with a blow-off top fuelled by widespread euphoria. That hasn’t happened yet, so it could still be in the cards. On the other hand, the macro picture is becoming gloomy. Governments are talking again about the possibility to introduce new lockdowns to backstop the increasing number of Covid cases globally.

Bitcoin could break higher.

A new leg up would extend to a new all-time high above and beyond the psychological price target of $100,000.

For this to happen, it will require a significant amount of capital to be deployed and a “coordinated” resilience of buyers to focus mainly on Bitcoin rather than other coins.

The market structure today has evolved dramatically. New coins emerge with new products and use cases daily. Even institutions now have many more options for investments. They are not only allocated into BTC and ETH.

Yet, Ethereum remains the main competitor that can move significant liquidity comparable to Bitcoin. That’s why it’s valuable to investigate the market conditions in relative terms. Specifically, it would be work keeping an eye on the price action of Bitcoin vs the trading pair ETH/BTC.

This turns out to be an interesting leading indicator of Bitcoin’s price action. When Bitcoin marks a new high (chart above), while at the same time its price is weakening versus Ethereum, that could signal that the uptrend is losing steam.

Bitcoin relative strength vs Ethereum

That’s exactly what happened in the case of all three major tops that Bitcoin experienced this year.

On the other hand, when Bitcoin recovers after a period of consolidation, the uptrend continues. A Bitcoin rally is on top of my crypto Christmas wish list, as it would significantly revive the mood of the market.

While the Ethereum flippening can still happen at some point in the future, Bitcoin has to make the next move now.

The Christmas-rally everyone was waiting for may not happen this year, but remember that Bitcoin has no calendar and no holidays. Surprises can come at any time!

Merry Christmas! 🎄

Trade safely