Bitcoin is back at the top of the chart this week after leaving its sudden $3,000 crash behind—can support hold?
Modern Consensus takes a look at what might be in store for Bitcoin price action over the coming days. We also publish a weekly roundup of the market, the latest edition of which can be found here.
Bitcoin price contends with a $1,300 futures gap
Monday has revealed a stronger Bitcoin trading environment after the weekend—but there are both good and bad consequences.
After a transformative two days, BTC/USD is now more than $2,000 higher than its local lows from last week. As Modern Consensus reported, after reaching $19,500 and seeing rejection, Bitcoin rapidly lost support further down to hit $16,300 just 24 hours later.
After a slight rebound, even $17,000 seemed shaky support, but the weekend’s trading delivered a dramatic turnaround. After regaining much of its lost ground, Bitcoin reached pushed back above $19,000, breaching $19,200 at press time.
At press time, data from TradingView showed BTC/USD was focusing on $18,800, and looking increasingly likely to retest $19,000. Gains since Friday have topped 15% on some exchanges.
As various commentators have noted, it seems that Bitcoin thus delivered a Black Friday “sale” for buyers, lingering lower just long enough to coincide with the seminal shopping date before continuing growth.
With the event now behind them, traders are still concerned about a further downturn on Monday, arguing that the timing gives away the weakness of the latest bull run’s foundations.
Among the skeptics is Michaël van de Poppe, who noted that dramatic volatility on weekends tends to have little sway over markets once traditional trading gets underway on the following Monday.
“Given that we’ve got this movement in the weekends or during the weekend times makes me a little bit cautious,” he summarized in his latest YouTube update on the day.
Van de Poppe added that the area around $18,500-$18,700 would need to become support in order to make the case for a continuation of the latest mini bull run.
Also making an appearance once again is a familiar force which has historically dictated short-term price direction: the CME Group futures gap. Thanks to the weekend’s progress, the difference between the end of CME Bitcoin futures trading on Friday and the start on Monday was $1,300—one of the biggest differences ever.
As Modern Consensus has previously mentioned, such futures “gaps” tend not to last for long, with BTC/USD rising or falling to “fill” them within days or even hours after they are created. In this case, the potential thus remains for a fresh dip as low as $16,900.
Guggenheim joins the bull train
As ever in the second half of 2020, the institutional mood sharply contrasts with short-term-focused concerns about spot price action by traders.
Adding to an increasing list of institutional buyers, Guggenheim, owner of a $5.3 billion Macro Opportunities Fund, said that it had reserved the right to buy into the Grayscale Bitcoin Trust. At stake would be up to 10% of net asset value, or $530 million, reports revealed at the weekend.
Grayscale is becoming increasingly revered as the largest Bitcoin buyer from the institutional sphere, with client interest causing it to buy up larger and larger amounts of BTC. Combined with newcomer PayPal, institutional demand is already draining all newly-minted coins from miners.
The resulting supply squeeze can only have one logical outcome: the buyers filling their quotas at a higher price.
Among extant pro-Bitcoin institutional names, meanwhile, Raoul Pal, founder of Real Vision, claimed on social media that beginning Monday, he would seek to exit gold and go 80% Bitcoin.
“Ok, last bomb – I have a sell order in tomorrow to sell all my gold and to scale in to buy BTC and ETH (80/20),” he told Twitter followers.
“I dont own anything else (except some bond calls and some $’s). 98% of my liquid net worth.”
Pal received scorn last week after appearing to show support for altcoin XRP, a highly controversial token thanks to its army of social media trolls who have brutally put down any public detractors.
Across crypto markets more broadly, altcoins gave a tepid reaction to Bitcoin’s resurgence, with few large-cap tokens seeing persuasive daily gains. An exception has been largest altcoin Ether, which rose 6.4% on Monday to still remain under $600.