Bitcoin rallied again on Tuesday, continuing its end-of-weekend recovery from last week's lows and grinding a bit higher to just under the $19,500 level. This is a bullish candle for a reason other than it's green. As Bitcoin grinded higher today -- only a few hundred dollars short of the marginal ATH around $19,900 -- it ascended above what could be a triangle consolidation pattern sketched in the chart below. This is a rough drawing, but if it is of any significance to larger active traders, then this would quality as an upside breakout from a sideways consolidation pattern in this triangle. If we see confirmation of this breakout, we could see Bitcoin retest the $20K resistance level as it did in November, and possibly, breakout above it for the first time.
(December 15, 2020 7:30PM EST)
The overall sentiment and narrative around Bitcoin has been nothing short of bullish of late with institutional names of all shapes and corporate structure lining up to add Bitcoin to their portfolio or balance sheet. As billions more enters the space and Bitcoin's programmatic deflationary monetary policy reduces the supply, the fundamentals and technicals appear to be lining up for a medium-long-term price adjustment -- to the upside. That being said, I'm a buyer on dips. I don't think there's a ton of downside here despite my belief Bitcoin may head a bit lower first before resuming higher. However, I think one year from now, buying under $20K will probably be viewed as "value."
Keep it mind, the Federal Reserve's Quantitative Easing program continues to print money at unprecedented levels, adding nearly another $1T to the money supply this month alone so far. In fact, 22% of all US dollars ever created were printed in 2020. While this inflow doesn't have immediate effects, it doesn't take more than a few months for this cash to make its way into markets -- of which it appears Bitcoin is starting to be one of them.
Support: I'm still looking (maybe hoping at this point?) for a short-term pullback, most likely retesting the $16,000 level as support. However, if Bitcoin has indeed put in a new local lower high at around $17,500 last week, then ~$18K may be the new (temporary) support. I don't put a ton of stock into that scenario, but we'll have to see how it plays out. I feel better about medium-term support being raised to $16K -- which, if you look at the chart two months ago -- is a huge increase. I'm a buyer on dips, hoping for "deeper" pullbacks to major support levels -- though I'm not sure if we get there.
Resistance: $20,000 is long-term resistance and has been for nearly three years now. Bitcoin’s not far off, but I think in the short-term, the path of least resistance is lower. Ultimately, I suspect 20K will be breached by no later than Q1 2020, then we’ll be talking $25,000, $30,000, and higher.
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