Things may be calmer than expected as 2021 ends, but the chances for "face-melting" green candles are sti
Things may be calmer than expected as 2021 ends, but the chances for “face-melting” green candles are still there, say analysts.
Bitcoin (BTC) starts a new week near $51,000 as the end of 2021 draws near and traders down tools for the holidays.
After a $50,000 Christmas, Bitcoin continues to take stock of a year in which it has gone from $29,000 to $69,000 and halfway back again.
Expectations were certainly not for such eerie calm to round out December — a blow-off top, the majority argued, should have already taken the market to $100,000 and beyond.
Instead, after dipping to $41,800, a slow grind through familiar territory is how Bitcoin appears to be finishing off what has been a post-halving year full of surprises.
With mixed emotions characterizing the end of Q4, Cointelegraph takes a look at what could shape BTC price action for the remaining few days of 2021.
Bitcoin on shorter timeframes: “Gently does it”
Despite concerns that thin liquidity could spark increased spot price volatility during the holiday season, so far, the opposite is true — Bitcoin is quiet, possibly too quiet.
The weekend saw little by way of unusual price moves, with a brief dip below $50,000 subsequently returning to the upside.
At the time of writing, $51,000 is forming a focus once more, with limited action up or down, data fro Cointelegraph Markets Pro and TradingView shows.
For popular Twitter trader Pentoshi, this was reason enough to lie in wait for the more important $53,000 zone to return before acting.
“Eyes still on 49.2 and 53-55k range per prev charts (contested territories),” he confirmed late on Sunday.
He noted the “clean” nature of BTC/USD on weekly timeframes, with the pair just above the midpoint in a multi-month range with $58,000 as its upper bound and $32,000 as its lower bound.
$58,000, he added in comments, could be the “most defining spot” for chartists in 2022.
Cautious in the short term, meanwhile, was filbfilb, co-founder of trading platform Decentrader, who despite flagging multiple bullish signals on Christmas Day warned that current BTC/USD levels may be something of a bull trap.
Unfortunately, PA now looks trappy at these highs, caution advised.
— filbfilb (@filbfilb) December 25, 2021
For him, the 50-day moving average, currently at $54,700, would be a bullish trigger point for the new year.
Stock-to-flow lives to fight another year
They may be facing a barrage of criticism, but the perennial stock-to-flow Bitcoin price models — and their creator, PlanB — refuse to give up.
According to tracking account S2F Multiple, BTC/USD should ideally be trading at above $97,000 this week, but reality has other ideas.
With the latest drawdown from all-time highs, Bitcoin is challenging the capabilities of a model series that has so far never been invalidated.
This has provided for contention — stock-to-flow uses two standard deviation bands around a key trajectory to monitor price, and Bitcoin currently sits between them. While in fact nowhere near invalid, the model has courted claims that its range of acceptable price action is too wide to be useful.
These were exacerbated when PlanB appeared to say that he would abandon the models should BTC/USD not trade at $100,000 by the end of 2021.
“To be clear: I have no doubt whatsoever that bitcoin S2FX is correct and #bitcoin will tap $100K-288K before Dec2021,” he wrote in part of comments in early November.
He subsequently retracted those claims, stressing that the standard deviation bands would dictate any technical invalidation. As such, stock-to-flow (S2F) and its spin-off stock-to-flow cross-asset (S2FX), both remain in play.
“Imagine thinking a model that has stayed within 1 standard deviation band for 3yrs has failed,” he countered.
“IMO we are in the exact same spot as March 2019 when I published S2F model: at the low end of the 1sd band. DYOR. Look at the chart. Your choice.”
S2F requires an average $100,000 price tag for Bitcoin this halving cycle, while S2FX ups that to $288,000.
PlanB’s floor model, also accurate throughout Bitcoin’s history, failed to track the monthly close for the first time in November.
Beware the open interest time bomb
Bitcoin spot price action could give everyone a headache on thin holiday volumes, but a key area to watch is derivatives.
After the clearout earlier this month, open interest in Bitcoin futures has been creeping back up. This in and of itself is unremarkable, but should expanding open interest combine with a conversely declining price, the stage is set for pain, filbfilb warns.
Most of the time risk can be found in OI: price up, OI up ok, price down OI down not so bad, prices down OI flat / up, get rekt.
— filbfilb (@filbfilb) December 26, 2021
He reasoned, however, that nuances mean the relationship…
cointelegraph.com