Bitcoin prices have had an interesting several days, plunging over the weekend and then bouncing back above the $50,000 level.
Taking these recent movements into account, and considering that 2021 is coming to a close, several analysts have weighed in on whether the world’s most prominent digital currency will experience a so-called Santa Claus rally, climbing during the last few weeks of this year and the start of the next one.
Technical analyst Katie Stockton authored a weekly note, in which she stated that “The weekly MACD is on a ‘sell’ signal for the first time since April, increasing risk into year end, noting there’s room to intermediate-term oversold territory.”
She was referring to the moving average convergence divergence (MACD), a technical indicator that incorporates multiple moving averages in order to provide “buy” and “sell” signals.[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
John Iadeluca, founder & CEO of multi-strategy fund Banz Capital, responded to Stockton’s observation.
“In reference to historical data, yes, the MACD signal would reduce the chances that Bitcoin will experience a Christmas-time Rally.”
“However, I believe it’s important for any analysts to know that while evaluating the odds of any year-end rally in Bitcoin price, that identifying the ‘events’ used to calculate any said odds is crucial towards any evaluation or projection of Bitcoin’s price.”
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Ben Armstrong, founder of BitBoy Crypto, also weighed in.
“The weekly MACD signals mirroring the lead up to the May crash is a challenge for Bitcoin this late in the year,” he stated.
“At most I can see an upswing to $90k but that is only in a very bullish scenario.”
“Traders need to be very careful now that we may be facing an extended bull run,” said Armstrong.
“Regardless, Bitcoin hitting $100k is inevitable.”
Scott Melker, a crypto investor and analyst who is the host of The Wolf Of All Streets Podcast, offered some perspective on the matter, focusing on the significance of the recent sell-off and technical indicators besides the MACD.
“While the Bitcoin correction appears to largely be a result of a single large spot seller triggering a liquidation cascade in the leverage market, it cannot be dismissed as meaningless,” he said.
“Bitcoin is now trading between two critical levels – 53K and 42K, although one could argue that $39,600 is the more significant support, because a break would signal a lower low and a break in macro bullish market structure,” he added.
“Unless prices can convincingly break 53K and flip it to support, one can expect for Bitcoin to continue to range through Christmas and beyond,” said Melker.
“RSI has not yet reached oversold on the daily chart, which could indicate that more shorter term downside is possible,” he noted.
“There’s nothing overtly bearish on the chart, but the likelihood of an immediate rally has been diminished.”
Sean Rooney, head of research at crypto asset manager Valkyrie Investments, also weighed in on bitcoin’s short-term outlook.
“After spot selling led to cascading liquidations on offshore derivative platforms over the weekend, the overall Bitcoin marketplace finds itself in a healthier state with drastically less open interest,” he stated.
“The price of bitcoin breached the 200-day moving average, but rebounded strongly to over 20 percent from the low,” said Rooney.
“A rally to a new all-time high isn’t likely before the end of the year, however it wouldn’t be surprising to see Bitcoin return to it’s previous range between $53,000 and $60,000.”
Sylvia Jablonski, cofounder and chief investment officer for ETF sponsor Defiance ETFs, took a different approach, speaking to the broader developments affecting the global asset markets.
“Today’s rebound (10K off of last weekend’s 42k lows), tells me that Santa Claus may indeed be coming to town,” she said.
“Bitcoin and crypto seem to have reacted to the same three headwind forces impacting equity markets. Omicron, Inflation and the taper led to uncertainty in risk assets across the board, and crypto was not able to escape it,” emphasized Jablonski.
“I continue to invest in equities because I believe that the economic recovery is stable to strong, 4.2% unemployment tells me that it does make sense to have less fiscal and monetary stimulus, and so tapering may be appropriate, and Omicron so far is sounding manageable, or less of a threat than detected.”
“I continue to invest in Crypto for those same reasons, but also because I believe that the crypto ecosystem is continuing to grow, international adoption continues, funds investing in crypto are on the rise which leads to demand and AUM, and it has become understood and accepted among the general population.”
Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether, EOS and sol.