Bitcoin nears the end of another week with $13,000 support intact and bulls still firmly in control — can the gains last as the U.S. elections near?
Despite days of intense volatility, Bitcoin has practically come full circle since Monday, preserving $13,000 and rejecting calls for a bigger drop.
Modern Consensus takes a look at the past few days in Bitcoin and what the immediate future might have in store for traders. We also publish a weekly markets outlook every Monday, the latest edition of which can be found here.
BTC price finishes a week of ranging
Bitcoin began the week already in a strong position as the fallout from PayPal’s adoption move continued to influence markets.
Fresh from local highs in excess of $13,300, BTC/USD began a period of consolidation in the lower $13,000 range before making a brief dip below that level.
More broadly, however, the $12,000-$13,000 corridor remained absent from price activity, thanks in part to a significant whale support cluster providing demand at $13,000.
Nonetheless, analysts were concerned that the recent gains had come too quickly, and that a correction was due which could take Bitcoin up to $2,000 lower. In the event, this did not occur, and the largest cryptocurrency instead began gaining once more.
A fresh winning streak topped out at $13,850 — roughly the same place as the culmination of the 2019 bull run — before ranging consolidatory behavior took control once again.
“2020 cycle is just the pre-bull cycle of 2021-2024,” popular trader Michaël van de Poppe summarized earlier in the week.
Analyst eyes “first signs” of macro decoupling
Bullish prognoses currently involve Bitcoin breaking $14,000 resistance sooner rather than later, and this would be significant. $14,000 provides the final major resistance cluster below Bitcoin’s all-time highs of $20,000 from late 2017.
Between the two, there are practically no hurdles or troubling features on the chart, with the minor exception of the CME futures gap still open at around $16,000. Van de Poppe, more conservative about short-term gains than some, predicts at $17,000 top once $14,000 is confirmed as a breakout entry point.
So far, there are little signs that support is in place to provide such a bullish move. Nonetheless, analysts have been impressed by the “organic” nature of the recent climb past $13,000, noting that genuine buyer support has replaced speculative trading to sustain the upside.
For statistician Willy Woo, creator of the Woobull analytics site, this also provides a useful hint that Bitcoin is beginning to create its own price trajectory independent of the wider macro sphere.
“First signs of de-coupling behaviour spotted between BTC and stocks,” part of a recent tweet reads.
“Buying from an influx of new users provides price support preventing speculators from trading the correlation downwards.”
Woo referenced his network value to transactions (NVT) price metric for BTC/USD, which he argues presents a more “organic” representation of network value. NVT price hit its own all-time highs of nearly $11,000 this week.
Dollar dominates as Iran turns to Bitcoin for trade
Looking to the week ahead, meanwhile, eyes will be firmly focused on the U.S. elections and their impact on global markets and the dollar.
Opinions on the outcome are mixed, but tend to favor a move up for safe havens such as gold regardless of who wins.
The U.S. dollar currency index (DXY) has increased in the run-up to polling day, an event which previously sparked price weakness in Bitcoin but which, like its correlation to stocks, also appears to be waning this month.
In a post-election economy, more and more Bitcoin bulls believe that BTC will become the investment asset of choice. That belief was bolstered on Thursday, as the government of Iran changed the law to allow the use of Bitcoin for international trade — officially the first to do so.
“The supermassive black hole is going to suck in everything,” Real Vision CEO Raoul Pal summarized this week.
“Again, this is (the) best trade/investment and future opportunity I have EVER found and it has the power to give the little guy a chance to grab their share of the wealth creation before Wall Street does. Grab it.”
At press time on Friday, Bitcoin traded back at the lower end of the $13,000 range, making use of support after a fresh trip north of $13,600 overnight.