COVID Fear Dents Crypto Market

Black Friday Discounts Across the Board

As Bitcoin declined below $60,000, many investors considered this an opportunity to buy at a discounted price, while others rushed to sell in fear that price may drop further. Currently, Bitcoin is trading around $56,700, after reaching a 6-week low at $55,128 on Tuesday.

The flagship cryptocurrency is still far away from its $69,000 peak reached on November 10, which makes it appealing for long-term hodlers and crypto whales. According to analytics firm Santiment, BTC whales (entities with holdings ranging between 100 and 10,000 BTC) have purchased 59,000 coins in a week. This is the equivalent of 0.29% of the entire BTC supply.

The third-largest Bitcoin whale is probably responsible for a large part of these buys, as the entity accumulated 6,665 Bitcoins in the span of 1.5 weeks. Starting on November 12, they made 8 buys, while BTC was going down: the first purchase was made slightly above $64,000 (1,123 coins), while the last was made at $57,400 (616 coins). At the time of writing the 6,665 Bitcoins are worth north of 371 million USD.

Chart Analysis – BTC/USD

After reaching the ATH at $69,000, the Bitcoin chart formed bearish divergence as highlighted on the chart below and has been on a constant decline. For the time being, the asset is unable to climb back above the 50-days Moving Average or at least above $59,000, which are now resistance zones.

The moving average is starting to flatten out, the MACD is below zero, and its lines are spread apart, indicating bearish momentum. On top of this, the Relative Strength Index is not oversold and there is no notable bullish divergence on the chart, suggesting that the decline may continue into $55,000 or even lower, towards the long-term bullish trend line seen on the Daily chart below.

From a longer-term perspective, Bitcoin is still in a strong uptrend and the current move is a normal pullback, which is usually followed by a new peak. If we look at chart patterns from the previous years, we can see that price climbed sharply at the end of 2017, declined in late 2018 and late 2019, but climbed sharply during late 2020. Thus, we have 1 bullish end of the year, followed by 2 bearish and then again 1 bullish.

Will 2021 have a bullish ending? Some analysts predict a new All-Time High by the end of the year but that scenario seems less and less likely to come to fruition unless BTC can quickly climb back above $60,000. Bitcoin’s legendary volatility can add a few thousand bucks to its price in just a few hours, so $60K is feasible but the same volatility can erase a few thousand bucks with ease, so it’s better to be safe than sorry.