Bitcoin fell during the week ending January 17th, falling over $10K to the $30K level before finding support and bouncing up before closing the weekly candle around $36K. This is a bearish candle for Bitcoin as it appears BTC has put in a local top for now and instigated the sellers to take profit near a significant level. I think Bitcoin's got some technical selling as it grinds downward to complete this long overdue correction.
(January 17, 2021 7:30PM EST)
Outlook: Bitcoin sold off last week, falling to $30K and recovering to the high $30,000s to end the week, showing some weakness in Bitcoin's chart as miners' selling and short-term traders took some profit off the table. I think this is a short-term shift in sentiment but Bitcoin will likely need to continue downward to complete this correction, which are usually ~30% during bull markets, before continuing on upward to new ATHs. A 30% correction would bring Bitcoin to the mid- to high- $20,000s, somewhere between $25K and $30K, which would make for a clean Fibonacci retracement and inspire confidence to bulls as Bitcoin may not even get low enough to test $20K as support given the increasingly bullish fundamentals and sentiment in the space.
Accordingly, it appears we're about to see Bitcoin start to revert back to the mean, which is probably in the high $20,000's. Seeing as how Bitcoin tends to make exaggerated moves in both directions, I think a moderate retracement here makes sense, probably down to at least the 38.2% Fibonacci retracement level at ~$28K (as shown in the weekly chart above) or more likely the 50% fib down to around $25K where an army of buyers will be more than happy to step in and buy the dip.
Of course, Bitcoin could go lower than that, possibly spiking as low as $20K, which technically would be very clean as a test of previous resistance turned support, though I suspect there will simply be too much buying pressure once Bitcoin breaks below $30K and then $25K to let the sellers take us that low. Given what we've seen from Bitcoin historically and now again 2020-2021, why would anyone short Bitcoin, especially when it's in a clear uptrend that's possibly more powerful than any other Bitcoin bull market we've seen in the past?
As far as price targets go, I think it's only a matter of time before BTC hits $50K, $75K, and then $100K, the first of which we will almost certainly see in H1 2021. As you can see in my chart above, after Bitcoin completes this correction, I think it recovers back up to the current ATH to test it, parries a weak rejection, and then breaks higher to continue to $50K where Bitcoin will achieve the $1 Trillion market cap for the first time.
Now, based on my traditional market and equity analysis, equities have gotten extremely overbought to the upside and are due for a significant correction in the immediate future which I suspect will likely have a collateral effect on Bitcoin and the greater crypto space's prices which are already starting to tumble a bit. Additionally, gold has been weak lately as the US Dollar has been strong, both bearish factors for Bitcoin. That being said, I think any such correction will be a fantastic opportunity to buy the dip and medium-long term value as Bitcoin resumes higher to end 2021 and enter 2022 with eyes on $100K. Anyone with an eye to the future would be wise to buy Bitcoin on dips or even earn Bitcoin however possible before it's too late/expensive.
A lot of people aren't aware of how institutional investors and hedge funds operate, but because they have a lot of compliance, risk management, and quarterly earnings that keeps them honest, many institutions are unwilling or unable to invest in asset classes (crypto) with small market caps (crypto in 2019). What does this mean? As Bitcoin gets bigger / more expensive, more funds can justify or even meet the base criteria for taking initial Bitcoin positions. In other words, the biggest Bitcoin and Bitcoin's market cap get, the more institutional investors will buy-in.
Support: Look for support around the $30K level, then the 38.2% fib at $28K, 50% fib at $25K, and my absolute floor is $20K at this point. I think a pullback to $25K is more reasonable and will provide a healthy discount to what will almost assuredly an exponentially higher future valuation.
Resistance: Look for resistance at large, round psychological numbers in $5,000 intervals: $40K, $50K, etc. I imagine $50K would be strong resistance, although the bigger Bitcoin gets the more legitimacy it gains = more institutional investors can justify taking initial positions.
