Why Closing Out The Year Below $50,000 Could Be Bad For Bitcoin

Picture of Bitcoin superimposed on a devil smiley

A number of predictions had put the value of bitcoin at $100,000 by the top of the yr and though there are nonetheless some weeks left to go, it doesn’t appear to be these predictions will come to go. Bitcoin has nonetheless maintained a bullish pattern regardless of value crashes and big liquidations rocking the digital asset in latest instances.

Since analysts, and the crypto market generally, has been so centered on the bullish way forward for the asset, there has not been a lot consideration paid to a low for the yr. As the top of 2021 rolls round, it is very important not solely have a look at the bullish end-of-year predictions but additionally how the cryptocurrency may be affected relying on the value bitcoin closes at.

Related Reading | Bitcoin Open Interest Takes Second Largest Dump Of 2021

Crypto analyst Justin Bennett addresses this in his latest issue of the weekly newsletter. Bennett maps out the outlook for the digital asset, in addition to the implications of bitcoin closing out the yr under $50,000.

Options Contracts Becoming Worthless

Some of the bitcoin choices contracts are set to run out on the finish of the yr and the profitability of those choices contracts rely vastly on what value BTC is once they expire. Since the crash, bitcoin has struggled to take care of its worth above $50,000 and this has not been good for the choices contracts. Bennett notes {that a} shut under $50,000 would see all of those contracts expire nugatory, taking part in into what he known as the “max ache concept”.

The crypto analyst shouldn’t be notably assured within the digital asset’s means to complete the yr above $50,000. He expressed that he expects the consolidation in bigger cap cryptocurrencies to proceed via the final month of the yr.

Bennett nonetheless notes that there’s a wide selection for bitcoin because of the December 4th candle. This implies that wherever between $42,000 and $53,000 is feasible going ahead, offering an enormous margin for the digital asset.

BTC value continues downtrend | Source: BTCUSD on TradingView.com

Bitcoin Volume Is Concerning

Bennett additionally factors to the shortage of quantity within the cryptocurrency. One factor is to begin a rally or a breakout, however the different factor is to get sufficient quantity to match that breakout. Otherwise, a rally wouldn’t achieve success.

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“If we’re to see Bitcoin and the remainder of the crypto market breakout later this month and even January, we have to see quantity to match the value improve,” mentioned Bennett. “Without quantity, any rally and even breakout is extra prone to fail.”

As bitcoin continues to consolidate following a $53,000 take a look at, the market is quietly ready for extra institutional cash to pump into the market. Currently, Bennett has put the bitcoin key assist at $49,000. “Below that’s the April pattern line close to $46,000,” Bennett notes.

Featured picture from Bitcoin News, chart from TradingView.com

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