$65,340.80
+2.06%
$3,160.78
+4.96%
$80.03
+3.28%
$30.39
+7.48%
$122.85
+6.4%
$0.00
-2.63%
$26.98
+5.79%
$0.16
+6.97%
$22.01
+6.23%
$0.00
+7.75%

Bitcoin analysis for the rest of 2021: the near-term trend is favourable


Perhaps the most hotly debated and closely watched asset throughout 2021 has been bitcoin (BTC).  As we entered 2021 the digital currency was trading just shy of $30,000, but in just a few of months it had more than doubled in value to over $60,000. 

That surge was a catalyst for the broader cryptocurrency industry to boom. Many well-known cryptocurrencies, like ethereum (ETH) and cardano (ADA), joined the rally. Even meme cryptocurrencies such as dogecoin (DOGE) exploded in value, giving timely investors a potential once-in-a-lifetime return.

But after peaking at more than $64,000 on April 14, 2021, it all started to go south – bitcoin prices fell hard and by mid-July it was trading back near the $30,000 level where it started the year. Then a summer surge appeared taking it above $50,000 in July; a small pause in September while it gathered its breath for another surge, this time to a new all time high of more than $68,000.  

Of course in the volatile world of cryptocurrencies things can change in the blink of an eye and down the price has gone to where it stands today (25 November) at $57,602

This begs the question: will bitcoin go up in the final month of 2021? If so, can the momentum be sustained and bitcoin move on to retest those all-time highs, or will any momentum be met with more heavy selling pressure?

Bitcoin timeline: April to September 2021

After recording historic all-time highs of above $64,000, many investors had come to believe that a bitcoin price target of $100,000 by the end of 2021 was within reach. Even if prices remain roughly unchanged through December, investors who bought in 2020 are sitting on an impressive profit.

Few investors would have expected bitcoin to tumble in such dramatic fashion. One of the more notable contributors to the negative bitcoin trend came out of China. The Chinese government ordered the crackdown of crypto mining operations in June.

In all, more than 90% of China’s bitcoin mining capacity was taken offline, and it wasn’t immediately clear if this was a short-term event. Some bitcoin investors found the $30,000 level attractive enough to come in and buy the coin, and a sustained turnaround started to show some signs of life.

Perhaps the most notable bitcoin price news was El Salvador’s adoption of the digital currency as legal tender. The South American nation saw its lawmakers vote 62 to 22 to make its cryptocurrency ambitions official. 

As legal tender, businesses are mandated to accept bitcoin as payment while the country opens 200 bitcoin ATMs that can convert US dollars to digital currency. 

But on Tuesday, 7 September 2021, the day when the country officially adopted bitcoin, the coin lost nearly 10% in value. Perhaps the timing caused many bitcoin watchers to think twice about their stance on the coin. Bitcoin bulls and supporters might have brushed off a one-day selloff, seeing it as nothing unusual for a valitale asset.

Others might argue that the bitcoin price drop was consistent with a broader market sell-off among risk-assets. One needs to only look at the price action in the stock market at the same time for confirmation of weakness across multiple asset classes. 

This weakness can be attributed to both global economic recovery concerns and the unknown financial impact of China’s Evergrande fiasco.

price

Moving on to a second popular technical analysis tool should give us more insight into the bitcoin price analysis. The relative strength index (RSI) dipped below 30 when bitcoin ever so briefly fell below the $40,000 level in late September.

The RSI is currently at 27.08, the last time the RSI was below 30 was in July when bitcoin was flirting with the $30,000 mark. Prior to that, the RSI was also below 30 in May, also when Bitcoin was testing the $30,000 level on a leg down.

From this, we can conclude that the RSI has done a pretty good job at gauging the rhythms of the swings in bitcoin volatility. Near-term traders might consider buying bitcoin at current levels and selling when the RSI starts to push overbought conditions.

Looking back at the chart, traders and short-term investors may want to consider taking profits off the table at $48,000 or $52,000. According to Capital.com’s Chief Market Strategist David Jones, covering the latest bitcoin price action in his recent video: 

“I’d only start to worry about the short to medium-term bullish argument into year end if it [bitcoin] dipped below $37,200 area. So it’s run a little bit out of steam for the last couple of weeks or so, but broadly speaking, for me it is still in recovery mode.”

 

Bitcoin trading strategy: conduct your due diligence

So long as bitcoin is able to trade above the $37,200 level, the longer-term trend is favourable. Coupled with the absence of any sustained and sharp weakness, one could make the case for a more positive end for 2021. Granted, it may take some time for bitcoin to fully recover and test the $70,000 level.

A dip below around $37,200 should be of concern to investors and could imply a return to the $30,000 level.

Bottom line, the near-term picture for bitcoin looks to be more positive than negative given the digital coin’s ability to maintain the $42,000, while the RSI recently flashed a buying signal. But as is the case with all digital currencies, especially bitcoin, volatility can strike at any moment. The market could see another significant correction.

Please note that any technical and fundamental analysis, and analyst sentiment should not be regarded as investment advice. Any bitcoin price prediction can be wrong. Markets are volatile and the price of an asset can always go against your position.

Edited by Alexandra Pankratyeva

Read more: Bitcoin price prediction 2025: will the coin reach $100,000?

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Read More:Bitcoin analysis for the rest of 2021: the near-term trend is favourable