Bitcoin explodes above $23,000: What top analysts now think is possible

The bitcoin price (BTC) has managed to cross the $23,000 mark, shortly after breaking through its all-time high at $20,000. As the dominant cryptocurrency now enters price discovery, analysts are forecasting short-term trends.

In the short term, Bitcoin’s outlook remains obviously optimistic. There are no historical resistance and support levels above $20,000, so it Bitcoin Bonanza remains uncertain how far BTC can rise until the next top.

However, analysts identify three trends that could emerge as a result of BTC’s strong rally overnight

Massive volatility is coming – both down and up

Bitcoin has been moving up quickly over the past 48 hours. This means order books are thinner and volume is higher.

A pseudonymous trader known as „Bitcoin Jack“ explains that the BTC price „can cascade viciously up and down“. The trader:

„Liquidity is so dry that you can clear the sell side on Bitstamp with a buy order of <650 btc lol. Obviously sellers are stepping in, stops etc, but what I’m trying to say is that the books are super thin again after this recent push, price can cascade up and down viciously.“

Massive price swings are increasingly likely due to higher open interest and rising whale inflows.

Open interest refers to the total sum of all active futures contracts in the market. The higher the open interest, the more traders are betting on the price of BTC in the futures market.

According to CryptoQuant data, aggregate open interest on major cryptocurrency exchanges has reached an all-time high. When open interest on futures exchanges skyrockets, the likelihood of a massive volatility spike increases.

The chances of cascading liquidations are also increasing, which could lead to increased upside or downside within a short period of time.

Altcoins could have a tough time

Alternative cryptocurrencies (altcoins) thrive when bitcoin stagnates or consolidates.

Investors are starting to look for riskier and more volatile plays to make up for the lack of volatility in the bitcoin market. But when BTC starts to rise by 10-20% in a single day, it sucks the volume and volatility out of the cryptocurrency market.

In the foreseeable future, this could mean that altcoins are likely to struggle against bitcoin. A pseudonymous trader named „Loma“ commented:

„BTC ~10% up and a sea of red for most ALTBTC pairings… Either be in bitcoin or try your luck with an outperformer. The game is still strong Bitcoin imo ALTs will have their time but opportunity cost is a real thing.“

Even most large-cap cryptocurrencies like Ethereum and XRP, which performed strongly during Bitcoin’s November rally, have underperformed in recent weeks.

Until Bitcoin stabilises and establishes clear resistance and support levels, altcoins have a higher chance of stagnating against Bitcoin.

The Office of the Attorney General of New York reported that Ifinex has been cooperating in the production of documents relating to Bitfinex’s and Tether’s trade relations since April 2019.

NY Attorney General expects Bitfinex/Tether case documents in weeksNOTES

The New York Attorney General’s Office, or OAG, has requested an extension of the deadline for iFinex Inc – the parent company of the Bitfinex crypto exchange and stablecoin Tether’s issuer – to produce the documents requested for its ongoing legal battle.

On 9 December 2020, the OAG wrote to Judge Joel Cohen to request that the deadline be postponed until 15 January 2020 – presumably a typo and, indeed, a request for the same date in 2021.

The request followed a virtual hearing on September 17, which concluded with the judge ordering a 90-day extension for iFinex to produce documents relating to trade negotiations between Bitfinex and Tether in April 2019 – when the OAG accused iFinex of mixing funds between two companies to cover the $850 million that Bitfinex lost by hiring the services of shadow bank Crypto Capital.

The OAG claims that iFinex has cooperated in the production of the requested documents since the September 17 hearing, predicting that the process will be „finalized in the coming weeks.

Despite persistent controversy, Tether’s USDT saw another record year of adoption, with the stable token expanding to operate in Omni, Ethereum, Eos, Algorand, Liquid and Solana.

According to CoinMarketCap, Tether’s capitalisation increased by 382%, from US$4.1 billion in early January to over US$19.76 billion today – suggesting that Tether’s admission in May 2019 that USDT was supported at only 74% for cash and equivalents did little to reduce demand for the stablecoin.

Tether’s relative volume dominance over the BTC also extended to 65.5%, compared to 16.2% earlier in the year. USDT currently accounts for 38% of the combined cryptomime volume.

Bitcoin er styrtet med næsten 9 procent efter at have etableret sin nye rekordhøjde nær $ 20.000 i sidste uge. Og et team af kvantitative strateger hos JP Morgan & Chase mener, at guld er bag flagskibets kryptokurrencyens korrigerende prisbevægelse.

Analytikerne, herunder Nikolas Panigirtzoglou, skrev, at Bitcoin-korrektion udsættes for et lignende træk på guldmarkedet. Da ædle metaller toppede i august 2020, fik det derfor investorer til at sikre kortsigtet fortjeneste og geninvestere gevinsten i Bitcoin Bank. Det forklarer, hvorfor kryptokurrency steg med cirka 100 procent, mens metallet faldt med 11,50 procent efter august.

Nu er en invers fraktal i gang. Bitcoin-priser er overskredet og forventer derfor en nedadgående korrektion for at neutralisere dens momentumsignaler. I mellemtiden handler guld nær et vendt supportniveau på $ 1.764 og forventer at komme tilbage.

„For Bitcoin,“ forklarede strategerne, „er momentumsignalerne forværret, hvilket sandsynligvis vil medføre salg af investorer, der handler på pristendenser.“

Bitcoin Whales Sniff

Seneste rapporter viste, at Bitcoins langsigtede indehavere – teknisk set de, der har haft kryptokurrency i mere end 166 dage i træk – realiserede deres overskud forud for, at det nåede et rekordhøjt niveau.

Robbie Liu, en investeringsanalytiker ved OKEx-kryptokursudveksling, sagde i en fredagsnotat, at detailhandlere syntes usikre på at komme ind i friske lange positioner i området $ 19,500-20,000, så store spillere kunne overhale som sælgere.

„I sidste ende vil vi sandsynligvis være vidne til en kamp mellem hvaler og detailhandlere, da Bitcoin forsøger at teste det centrale psykologiske niveau på $ 20.000.“

Peter Schiff, administrerende direktør for Euro Pacific Capital – et Californisk-baseret kapitalforvaltningsfirma, bemærkede også, at „langsigtede Bitcoin-tyre“ foretrak at sælge deres overskud for at søge eksponering i rivaliserende aktiver som guld.

Vælte

JPMorgan-analytikere sagde, at Bitcoin på lang sigt burde bevare sin bullish bias, da flere og flere investorer beslutter at omlægge deres kapital fra guldmarkederne. Banken bemærkede, at penge har strømmet ind på BTC-markedet siden oktober på det ædle metals regning.

„Indførelsen af bitcoin af institutionelle investorer er kun begyndt, mens den for guld er vedtagelsen af institutionelle investorer meget avanceret,“ skrev analytikerne.

De stillede børsnoterede sikkerhed Grayscale Bitcoin Trust mod børsnoterede fonde bakket op af guld. Førstnævnte tiltrak tilstrømninger til en værdi af 2 millioner dollars siden oktober, mens sidstnævnte modtog 7 milliarder dollars.