Bitcoin (BTC) had a week like no other, hit new record highs of $ 28,400 and stayed near the top – what’s next?
As the markets return to digest a wild Christmas, this week Cointelegraph is unveiling five factors that should help Bitcoin price direction.
Gold rises as Trump signs a stimulus bull
Markets were spared a nightmare this week after U.S. President Donald Trump agreed to sign Congress’s $ 900 billion coronavirus stimulus bill.
The package is intended to add large debt to the Federal Reserve’s existing mountain and include various business benefits, but it doesn’t provide Americans with the same direct financial support as it did in March.
Trump had said the low direct payment amount of the second stimulus – $ 600 versus $ 1,200 last time – meant he couldn’t tolerate it, but later changed his mind.
The markets have therefore started a new week on a positive note, with slight gains in S&P 500 futures ahead of Wall Street’s opening.
At the same time, gold has returned in style. Data shows the precious metal is now well on the way to making its biggest one-year gain in ten years.
Towards the end of November, XAU / USD was up $ 111, or 6.25%.
XAU / USD daily candle chart. Source: TradingView
“When President @realDonaldTrump vetoed just nine bills, the lowest number since Warren Harding, who only served two years from 1921 to 1923,” tweeted the gold bug and notorious Bitcoin naysayer Peter Schiff as the bill was signed.
“It is not since Chester Arthur (1881-1885) that a full term president has turned down fewer bills. You cannot drain the swamp by making it deeper. “
Mainstream Bitcoin Regulations
After Bitcoin hit a new tone with a wider audience over Christmas and hit new highs, it may soon have to face the music of the establishment, sources warn.
At $ 28,400 and a monthly gain of 55%, Bitcoin is now firmly anchored on regulators’ radar as mainstream attractiveness grows. Even for its advocates, next year could prove to be a challenging time.
With outgoing Treasury Secretary Steven Mnuchin leaving his mark trying to enforce new laws on unprotected purses, his successor Janet Yellen could hardly be an improvement, it said.
“In general, I think we had challenges with the Dems – they prefer more regulation, more control,” Meltem Demirors, chief strategy officer at CoinShares, digital asset manager, told Bloomberg on Sunday.
“I’m a little concerned about the direction things are going.”
As always in the US, the patchwork of political loyalties means that any attack can be mitigated by the presence of crypto-friendly people elsewhere. The new chairman of the Securities and Exchange Commission (SEC), Elad Roisman, is considered a fan.
Bitcoin counter-argument at $ 28,400 “very healthy” – analyst
Monday will focus on the recent Bitcoin spot market action and will become a major test for bulls given the momentum over the weekend.
After reaching an all-time high of $ 28,400 on Sunday, Bitcoin saw a pullback that many had been anticipating.
“#Bitcoin was corrected very healthy as it was pretty vertical. Could be the temporary peak for now, ”said Cointelegraph Markets analyst Michaël van de Poppe on social media.
“What’s next? Consolidation, sideways, less volatility. Give the rest of the markets room to keep up. $ BTC pairs are doing fine.”BTC / USD hourly candle chart. Source: TradingView
Van de Poppe sees the potential for altcoins in mind to begin their reaction to Bitcoin’s recent successes and argues that there are already signs that “old season” is upon us.
“After #Bitcoin finishes its run (and it’s pretty vertical), the money flows towards large caps. And then towards mid-caps and small caps, ”he continued.
“Altcoins are not dead, the flow of money is still the same.”
While some popular altcoins fidget against BTC, they are still delivering significant returns in USD, with market leader Ether (ETH) trading above USD 700 for the first time since May 2018. From the lows of USD 113 in March, ETH / USD is now up 530%.
ETH and BTC vs. USD performance since the beginning of the year. Source: Digital Assets Data
Record gap in Bitcoin futures
Bitcoin is grappling with the largest “void” ever seen in the futures markets this week.
Data from the CME Group’s futures shows that trading ended at around $ 23,825 on Friday. Monday started with a wick to lows of $ 26,500 from the opening tiers, with the difference being viewed as the largest ever seen in a weekend.
These so-called futures “gaps” refer to the gap between trading sessions on Friday and Monday, and the BTC / USD spot rate has a habit of returning to “fill” it later.
Over the past few weeks, however, that trend has slowed, leaving gaps between $ 16,900 and $ 19,500 that were only partially closed.
This, in turn, has led to theories among analysts – including Cointelegraph’s Van de Poppe – that Bitcoin could still come back down to get back below $ 20,000 levels just long enough to worry about its pending deal .
Should it not actually be the case, analysts may instead have to grapple with the loss of a once solid indicator of short-term Bitcoin price action.
CME Bitcoin futures chart with gap. Source: TradingView
Stock-to-flow predicts the high
In terms of price history, with the latest promotion, Bitcoin is at odds with one of its most famous and reliable pricing models – stock-to-flow.
After climbing to match the model’s exact needs over the past week, the weekend ensured BTC / USD outperformed. Sunday’s retracement to the mid-range of $ 26,000 ensured compliance was quickly restored.
As both its creator PlanB and Saifedean Ammous, author of “The Bitcoin Standard”, noted, Bitcoin as a whole remains true to the requirements of the stock-to-flow almost daily.
“Bitcoin’s price continues to track the projected value of the stock-to-flow model of @ 100trillionUSD with amazing precision,” Ammous said.
Bitcoin Stock-to-Flow Chart. Source: digital
Going forward, the various incarnations of the model will charge a price level between $ 100,000 and $ 576,000 by the end of the current halving cycle in 2024.