After the recent rapid rally, the bitcoin (BTC) market is likely to take a break before continuing its rise towards the end of the year, analysts told CoinDesk.
“The cryptocurrency could consolidate for a short time before moving higher into Christmas,” said Chris Thomas, head of digital assets at Swissquote Bank.
Indeed, further notable gains seem unlikely in the near term, as the cryptocurrency’s 60% rally from $ 9,800 to $ 15,900 over the past couple of months seems excessive, according to technical charts. Both the 14-day and 14-week relative strength indices are well above 70, indicating overbought conditions and the possibility of consolidation or minor withdrawal.
Echoing Thomas’ comments, Patrick Heusser, a senior cryptocurrency trader at Crypto Broker AG based in Zurich, expects bitcoin to consolidate between $ 14,000 and $ 16,000 in the coming weeks. However, he expects the break to allow for a rally in alternative cryptocurrencies, most of which have slowed bitcoin over the past couple of months.
Others suggest bitcoin could be moving towards more than consolidation. “Bitcoin is overbought after breaking through the critical resistance at $ 14,000, which suggests we could see a period of correction and consolidation,” said Joel Kruger, a currency strategist at LMAX Digital.
Historically, bitcoin he saw multiple pullbacks of more than 20% in previous bull markets. This time around, however, a sharp downside seems likely as sell-side liquidity appears to have dried up with increased institutional participation and strong holding sentiment among investors.
While observers are divided on whether prices will consolidate or retreat in the short term, there appears to be a consensus that bitcoin’s long-term outlook is bullish, with some predicting a retest of the record high of $ 20,000 by the end of December.
“We expect near-term volatility along with even more powerful upward trends, flirting with $ 20,000 before the end of the year and, if the stars align, $ 50,000 to $ 80,000 by the end of 2021”, Jehan Chu , co-founder and managing partner of Hong Kong-trading firm Kenetic Capital, told CoinDesk. Investor sentiment has never been better, Chu added.
Swissquote’s Thomas also expects a weaker dollar and political uncertainty in the US will boost bitcoin over the long term.
All in all, bitcoin is likely to maintain its overall upward trajectory. “He looks for the market to settle over $ 20,000 in 2021 before the next major upside extension in the $ 30,000- $ 40,000 range, Kruger said, and added that” any major setback should be well supported above $ 8,000. ” .
Bitcoin’s upward momentum has stalled since prices hit $ 15,971 on November 6. As of press time, the cryptocurrency is trading close to $ 15,665, representing a 2.3% gain over the day, according to CoinDesk’s Bitcoin Price Index.