Bitcoin ended a brief period of stability on Dec. 8 as selling pressure forced markets towards lower support.
Data from price trackers including CoinMarketCap and TradingView showed BTC/USD heading below $19,000 during trading, falling short of $18,500 support.
Trader warns over multi-week “top construction”
Traders were on edge on Tuesday, as volatility reappeared after a calmer weekend with little movement in either direction—a pattern known as “compression.”
“We still have overextended move and the potential top construction, and top constructions could take weeks (to form),” Michaël van de Poppe summarized in his latest YouTube update.
A top construction refers to the climax of a bull run in which Bitcoin fails to clinch a designated level, with momentum noticeably waning compared to the prior phase of appreciation. In this case, the level is represented by $20,000.
Van de Poppe highlighted the continued activity by institutional buyers in propping up Bitcoin, something which should continue in order to sustain bullish momentum going forward.
On the flipside, a change of fortune in the strength of the US dollar, currently showing multi-year weakness, could have the opposite effect.
“I’m watching the dollar, which means if the dollar is going to some surge in the last weeks of this year, most likely Bitcoin is going to fall and have some sort of corrective period,” he added.
The US dollar currency index (DXY), which measures USD against a basket of twenty trading partner currencies, bounced off 90 points last week, marking its bottom since April 2018.
Staying with the U.S., a potential decision over a new Coronavirus stimulus package this week could spur a decisive macro move around the dollar. Bitcoin, the theory goes, should respond automatically.
“It seems that Bitcoin’s next move depends on the result of the new stimulus release from the U.S. government. Since the crypto market has been moving relatively calm during the past few days. A longer period of building a robustness foundation is expected for the next Bitcoin bull run,” China-based exchange BTCC wrote in an update of its own on Tuesday.
“However, sooner or later the new stimulus comes up, Bitcoin is going to benefit from it anyway. Therefore, the next bull run is still on the way.”
Big corporate buys keep coming
As ever, some of Bitcoin’s big believers showed no sign of concern about short-term price action, publicly stating their plans for long-term investment.
MicroStrategy, which purchased $475 million in Bitcoin since August, this week confirmed that it was attempting to raise an additional $400 million for even more buys.
The news even set up a friendly tussle with investment giant Grayscale, which alone purchases more BTC per month than miners produce. Grayscale’s BTC assets under management now total over $10 billion.
“Starting to sweat a bit over here,” CEO Barry Silbert joked on Twitter.
MicroStrategy’s move was seen by commentators as a strategic positioning for the future regulatory landscape, in a world yet to see regulators approve a Bitcoin exchange-traded fund (ETF).
“MicroStrategy stock is about to mimic a leveraged long instrument on BTC. 2x long BTC ETF. Masterfully played,” statistician Willy Woo responded.
