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Analysts Eye Multi-Month Bitcoin Accumulation Phase as Bears Weaken

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  • Bitcoin is flashing immense signs of strength today, with its rebound from yesterday’s decline to $14,400 being an impressive display of bulls’ current control of the asset
  • This rebound has significantly bolstered its technical outlook and only further confirms what many have already suspected – dips are for buying in this market environment
  • One analyst is now noting that Bitcoin could soon start an accumulation phase before it can make a bid at setting fresh all-time highs
  • If this path plays out, then the cryptocurrency could be poised to see some sideways trading before it can push higher

Bitcoin and the aggregated crypto market are seeing some incredibly strong price action today. This comes close on the heels of an intense pullback that led some investors to anticipate a bear-favoring trend reversal.

This has yet to come to fruition, and the intense upswing seen throughout the past few hours confirms that this is a bull market and that dips are for buying.

One trader is now noting that the benchmark crypto could soon enter a prolonged accumulation phase heading into the end of the year.

Bitcoin Shows Signs of Strength as Analysts Eye Move Higher 

At the time of writing, Bitcoin is trading up over 5% at its current price of $15,620. This marks a massive rise from the cryptocurrency’s recent lows of $14,400 set yesterday afternoon.

This selloff was the first major pullback seen since it rallied to $16,000 earlier this week, although the rebound’s intensity since tapping these lows indicates that bulls are in full control.

Unless bulls face another rejection at $16,000, there’s a strong possibility that fresh yearly highs are imminent.

BTC Could See a Multi-Month Accumulation Phase: Claims Trader

One trader stated in a recent tweet that he is watching for Bitcoin to enter an accumulation phase that allows it to see further upside in 2021.

“BTC / USD Monthly: It still looks so good, I would love to see accumulation here over the next 2 months going into 2021, I think it’s mega bullish if support is maintained at $13800. Bears still looking pretty weak for now across the board, I’m just watching, no leverage longs.”

Image Courtesy of Cactus. Source: BTCUSD on TradingView.

If Bitcoin can close its weekly candle above $16,000, it could soon see a sharp rally up towards its all-time highs in the weeks ahead. If it maintains below this level, it could consolidate through the next few months.

Featured image from Unsplash.
Charts from TradingView.





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Bitcoin

Bitcoin may lose $30K price level if stocks tank, analysts warn

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The ghost of stock market crash is back again to haunt Bitcoin (BTC).

It happened last in March 2020. Back then, the prospect of the fast-spreading coronavirus pandemic led to lockdowns across developed and emerging economies. In turn, global stocks crashed in tandem, and Bitcoin lost half of its value in just two days.

Meanwhile, the U.S .dollar index, or DXY, which represents the greenback’s strength against a basket of top foreign currencies, has now climbed by 8.78% to 102.992, its highest level since January 2017.

The huge inverse correlation showed that investors dumped their stocks and Bitcoin holdings and sought safety in what they thought was a better haven: the greenback. 

More than a year later, Bitcoin and stock markets again wrestle with a similar bearish sentiment, this time led by a renewed demand for the U.S. dollar following the Federal Reserve’s hawkish tone.

Namely, the U.S. central bank announced Wednesday it will start hiking its benchmark interest rates by the end of 2023, a year earlier than planned.

Lower interest rates helped to pull Bitcoin and the U.S. stock market out of their bearish slumber. The benchmark cryptocurrency jumped from $3,858 in March 2020 to almost $65,000 in April 2021 as the Fed pushed lending rates to the 0%-0.25% range.

Meanwhile, the S&P 500 index rose more than 95% to 4,257.16 from its mid-March 2020 peak. Dow Jones and Nasdaq rallied similarly, as shown in the chart below.

Bitcoin, Nasdaq Composite, S&P 500, and Dow Jones rose in sync after March 2020 crash. Source: TradingView.com

And this is what happened after the Federal Reserve’s rate-hike announcement on Wednesday…

Bitcoin and the US stock market plunged after the Fed’s rate hike update. Source: TradingView.com

Meanwhile, the U.S. dollar index jumped to its two-month high, hinting at a renewed appetite for the greenback in global markets.

U.S. dollar index jumped up to 2.06% after rate hike announcement. Source: TradingView.com

Popular on-chain analyst Willy Woo said on Friday that a stock market crash coupled with a rising dollar could increase Bitcoin’s bearish outlook. 

“Some downside risk if stonks tank, a lot of rallying in the DXY (USD strength) which is typical of money moving to safety,” he explained. 

Michael Burry, the head of Scion Asset Management, also sounded the alarm on an imminent Bitcoin and stock market crash, adding that when crypto markets fall from trillions, or when meme stocks fall from billions, the Main Street losses will approach the size of countries.

“The problem with crypto, as in most things, is the leverage,” he tweeted. “If you don’t know how much leverage is in crypto, you don’t know anything about crypto.”

Burry deleted his tweets later.

Some bullish hopes

Away from the price action, Bitcoin’s adoption continues to grow, an upside catalyst that was missing during the March 2020 crash.

On Friday, CNBC reported that Goldman Sachs has started trading Bitcoin Futures with Galaxy Digital, a crypto merchant bank headed by former hedge fund tycoon Mike Novogratz. The financial news service claimed that Goldman’s call to hire Galaxy as its liquidity provider came in response to increasing pressure from its wealthy clients.

Related: Hawkish Fed comments push Bitcoin price and stocks lower again

Damien Vanderwilt, co-president of Galaxy Digital, added that the mainstream adoption would help Bitcoin lower its infamous price volatility, paving the way for institutional players to join the crypto bandwagon. Excerpts from his interview with CNBC:

“Once one bank is out there doing this, the other banks will have [fear of missing out] and they’ll get on-boarded because their clients have been asking for it.”

Earlier, other major financial and banking services, including Morgan Stanley, PayPal, and Bank of New York Mellon, also launched crypto-enabled services for their clients.

Is Bitcoin in a bear market? 

Referring to the question “are we in a bear market?” Woo said that Bitcoin adoption continues to look healthy despite the recent price drop. The analyst cited on-chain indicators to show an increasing user growth and capital injection in the Bitcoin market.

He also noted that the recent Bitcoin sell-off merely transported BTC from weak hands to strong hands. 

7-day moving average of coins moving between strong and weak hands. Source: Willy Woo

Woo reminded:

“My only concern for downside risk is if we get a major correction in equities which will pull BTC price downwards no matter what the on-chain fundamentals may suggest. Noticing USD strength on the DXY, which suggest some investors moving to safety in the USD.”