Bitcoin is more likely to consolidate earlier than December climbs to $ 20,000, analysts say
After the recent rapid rally, the Bitcoin (BTC) market should take a breather before resuming its surge towards the end of the year, analysts told CoinDesk.
"The cryptocurrency can consolidate for a short time before it turns into the Christmas season," said Chris Thomas, Head of Digital Assets at Swissquote Bank.
More notable gains are unlikely in the short term as the cryptocurrency's 60% rally from $ 9,800 to $ 15,900 in the past two months appears overwhelmed according to technical charts. Both the 14-day and 14-week relative strength indices are well above 70, indicating overbought conditions and scope for consolidation or minor pullback.
Patrick Heusser, Senior Cryptocurrency Trader at Crypto Broker AG in Zurich, assumes that Bitcoin will consolidate in the range of 14,000 to 16,000 US dollars in the next few weeks. However, he believes the hiatus will allow a rally in alternative cryptocurrencies, most of which have lagged behind Bitcoin in the past two months.
Others suggest that Bitcoin is aiming for more than just consolidation. "Bitcoin is overbought after the critical resistance rose at $ 14,000, suggesting a period of correction and consolidation is imminent," said Joel Kruger, currency strategist at LMAX Digital.
In the past, Bitcoin has seen multiple retreats of over 20% in previous bull markets. This time, however, a sharp decline is to be expected, as the liquidity on the sell side seems to have dried up with the increasing institutional participation and the strong holdings of investors.
While observers disagree on whether prices would consolidate or pull back in the short term, there seems to be a consensus that Bitcoin's long-term outlook is bullish. Some expect to retest the record high of $ 20,000 by the end of December.
"We expect short-term volatility alongside even stronger uptrends that flirt at $ 20,000 before the end of the year and, if the stars align, flirt with $ 50,000 to $ 80,000 by the end of 2021," said Jehan Chu, co-founder and managing partner of Hong Kong. The trading company based in 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 to drive Bitcoin higher in the long run.
All in all, Bitcoin should maintain its general upward trend. "Look for the market to establish above $ 20,000 in 2021 before the next major upward widening to $ 30,000 to $ 40,000," Kruger said, adding, "Any major setbacks should be above $ 8,000 well supported. "
Bitcoin's upward momentum has stalled since prices hit $ 15,971 on Nov. 6. At press time, the cryptocurrency is trading near $ 15,665, which is a daily gain of 2.3% according to CoinDesk's Bitcoin Price Index.