Bitcoin (BTC) is almost unrecognizable as it starts in the first work week of 2021, supports $ 30,000, and hits astronomical new highs.
Believe it or not for Hodler, price action continues to be impressive as Monday kicks in and attention is focused on what might come next.
Cointelegraph takes a look at five factors investors are looking to watch over the coming days in one of the most volatile Bitcoin trading markets in history.
Stocks hit highs as Bitcoin “flipped” the Dow
It’s another strange week for stocks as last week’s all-time highs across several indices are expected to continue.
As the first few days of the New Year came to an end, the Dow Jones and S&P hit record highs – despite the penetrating coronavirus that triggered ever tighter bans around the world.
For Bitcoiner, the Dow took on a different kind of meaning last week, with BTC / USD “flipping” its 30,600 points for the first time as it continued to climb to $ 34,000 and higher.
This week, analysts are forecasting stocks will continue to rise, part of a long-awaited rebound that, similar to last year, appears to be at odds with the situation there.
“A strong recovery in global growth from vaccines will significantly boost cyclical assets, including commodities, cyclical stocks and emerging markets,” Goldman Sachs told Bloomberg as part of its 2021 outlook.
“The path can be difficult, however, as the market balances the weakness in spot growth with a more supportive outlook.”
Not everyone was that bullish. Fidelity, the money manager known for its pioneering pro-Bitcoin stance, countered:
“2021 will likely be about seizing relative opportunities as investors evaluate economic and virus-related developments.”Correlation graph between Bitcoin and stocks. Source: Digital Assets Data
Futures gaps can remain open forever
After Bitcoin collected $ 34,800 over the weekend, it urgently needs a consolidation phase at the beginning of the week.
The highs, which still seem unreal to many investors, have many hurdles to overcome to defend themselves and not allow Bitcoin to give way to the bears.
One of the most pressing problems for traders is the bitcoin futures “gap” created by the volatility of the weekend. The gap ranges from $ 29,695 to $ 32,400, and joins what was seen as one of the largest ever on the Bitcoin futures chart last week.
1-day candle chart (CME) for Bitcoin futures with visible gaps. Source: TradingView
As Cointelegraph previously explained, “gaps” in futures are the price differences between the end of futures trading on a Friday and the start of the following Monday. If there is high volatility in between, the resulting gap is often a short-term price target.
In this case, Bitcoin has the impetus to test levels at just under 30,000 US dollars again. Should it want to fill in minor gaps that haven’t been tested yet, the market could drop even further – last weekend’s pit of the gap is at $ 23,800.
While many loopholes have been filled in the past few months, the idea of a $ 24,000 bitcoin is now a distant possibility, according to noted statistician Willy Woo.
“We’ll never see $ 20,000 BTC again,” he predicted on Sunday.
“To support $ 24,000, it would take a Black Swan event to collapse. The reserve price supported by long-term buyers increases very quickly. “
$ 20,000 itself is a zone of interest for those investigating the loopholes, with two major vacuums in the futures markets still below this significant level.
Difficulty getting hash rate on track for new records
In the meantime, everything is changing for the better under the core fundamentals of Bitcoin. After a month of small declines, the network difficulty is again adjusted to push up to reach new record highs.
The next automated adjustment later this week is currently expected to increase the difficulty by just over 5%.
In the last two adjustments, prices fell by 2.5% and 0.4% respectively, which is an interesting contrast to the rapid increases in the spot price observed at the same time.
Difficulty is arguably the most important technical aspect of Bitcoin when it comes to its “hard” money status. This allows the network to be essentially self-governing and remain safe regardless of the involvement of miners or price promotions.
Simultaneously with difficulty, the hash rate also challenges all-time highs. As of Monday, the 7-day averages for the metric are 145 exahashes per second (EH / s), just 1 EH / s below the record highs from last October.
The hash rate refers to the computing power required to participate in the Bitcoin network. Current data suggests that participation and the desire to keep the network secure is stronger than ever.
Bitcoin 7-day average hash rate 6-month chart. Source: Blockchain
After three years, Ether returns to $ 1,000
Perhaps the most telling sign of price development is the cryptocurrency itself.
While Bitcoin alone is impressive, this weekend ended with an even more noticeable surge in Altcoins, and ethers (ETH) in particular. The largest altcoin is up over 30% in the last 24 hours alone, bringing its weekly gains over 50%.
As reported by Cointelegraph, the company hit an important level on BTC on Sunday, and in terms of US dollars, the largest altcoin is back in the four-digit range for the first time in three years.
Bitcoin vs. Ether since the beginning of 2021. Source: Digital Assets Data
According to Cointelegraph Markets analyst Michaël van de Poppe, such a move indicates that a de facto return of the “old season” – a period of rapid growth in altcoin markets during the consolidation of Bitcoin – has occurred.
“Another week in which Ethereum will close above the crucial threshold of the BTC pair,” he commented on late Sunday.
“Most likely a sideways continuation before a continuation up towards a new higher high. 2021 looks good for Ethereum. “
The token’s success has long been in formation. Ether spent much of 2020 joking around Bitcoiners as even the release of its long-awaited Ethereum 2.0 protocol transformation had no noticeable impact on the price.
Even so, the altcoin was actually the best investment of the year, outperforming Bitcoin from its March lows when it was trading at just $ 113 – a tenth of its current level.
ETH / USD 1-day candle chart (Bitstamp). Source: TradingView
Here comes the off-season!
If ether dictates the re-emergence of altcoins, such as THETA, it is already evident when examining the state of dominance of bitcoin.
As ETH / USD spiked overnight on Sunday, Bitcoin’s share of total cryptocurrency market capitalization began to drop dramatically. Compared to 73.5% on Sunday, the printing time was closer to 68.3%, as data shows.
1-day candle chart of Bitcoin market capitalization. Source: TradingView
This type of behavior is a classic indicator of the off-season and will remind longtime hodlers of the January 2018 events. At the time, Bitcoin fell from highs of nearly $ 20,000, but altcoins exploded and ETH / USD hit current all-time highs of $ 1,500.
Given that Bitcoin managed to break its own 2017 record, it is this pattern of behavior that has fueled speculation that ether and other altcoins will soar much higher in the short term.
“Bitcoin and Ether ETH are already the biggest hits of 2021,” summarized Tyler Winklevoss, co-founder of Exchange Gemini, the Twitter followers.
It’s not just ether. Litecoin (LTC), the fourth largest cryptocurrency by market cap, is up 15% since Sunday and is once again within the hair of XRP to take third place.
XRP, which is struggling due to legal action against Ripple, has still managed to make progress. It rose nearly 10% overnight and reclaimed $ 0.24.