🥇 First rule of investing? Know when to save! Up to 55% off InvestingPro before BLACK FRIDAYCLAIM SALE

Bitcoin Seeks New Direction Amid December Consolidation: What Levels to Watch

Published 12/22/2023, 06:22 AM
BTC/USD
-
  • Bitcoin is in a consolidation phase in December, using the $42,700 average level as a pivotal point
  • The significant surge in value fueled by spot ETF news in 2023 appears to have been absorbed by the market
  • As the year concludes, anticipation centers on continued consolidation, influenced by corporate portfolio adjustments for the new year
  • Looking to beat the market in 2024? Let our AI-powered ProPicks do the leg work for you, and never miss another bull market again. Learn more here.
  • {Bitcoin} continues to consolidate using the $42,700 average level in December as a pivot level. Which direction could the world's largest cryptocurrency move next?

    Let's begin by examining Bitcoin from a broader perspective on the weekly chart. Within the context of 2023, Bitcoin operated within an ascending channel, encountering resistance at the upper band of the channel in December.

    Conversely, a contrasting chart pattern emerged during the September-October period. During this timeframe, Bitcoin exhibited a marginal horizontal uptrend for a month, finding support in the lower band of the channel. Following this, a surge in demand, fueled by spot Bitcoin ETF news, resulted in Bitcoin gaining over 60% in value over two months.

    Currently, there's an observation that the impact of the spot ETF news for Bitcoin has largely been factored into the market. As the year concludes, the expectation is that Bitcoin's consolidation phase may persist over the next 10 days, particularly considering corporate companies reassessing portfolios as part of their New Year plans.

    The initial month of 2024 is anticipated to be dynamic for Bitcoin. Market expectations hinge on the approval of the spot ETF product in the second week of January, presenting an unaccounted-for stress factor in the cryptocurrency realm.

    While a negative decision or further delay by the SEC seems improbable, potential panic selling could ensue if it materializes. Recent updates on applications have also introduced some uncertainties.

    The incorporation of a fiat currency option in ETF redemption introduces the risk of the investment vehicle overly concentrating on Bitcoin prices. This might impact investors' enthusiasm for the product, and persistently low trading volumes post-launch could be a catalyst for Bitcoin sell-offs. Additionally, if the market tendency to buy the expectation and sell the realization recurs, the Bitcoin market may exhibit a mixed course.

    Nevertheless, a holistic assessment underscores the prevailing positive sentiment towards the cryptocurrency market, especially Bitcoin. Despite this, it's imperative not to overlook associated risks.Bitcoin Weekly Chart

    Examining Bitcoin from a technical standpoint reveals a persistent struggle for the price along the upper band to breach the $44,000 threshold over the past three weeks. Any resulting selling pressure could lead to a weekly close below $42,700, signaling a descent into the lower region.

    The recurring role of this pivotal level as resistance might bolster downward momentum, indicating a potential correction extending to the $36,500 - $37,000 range. Along this trajectory, the $39,400 band could serve as an interim support, with the likelihood of an acceleration in the correction beneath this value. The Stochastic RSI, consistently signaling oversold conditions on the weekly chart, reinforces seller confidence by dipping below 80 below $39,400.

    In a bearish scenario, a decline to the $36,000 region and the ensuing support becomes pivotal. Notably, this juncture could position Bitcoin for a robust rebound, attracting more investors post a limited correction.

    Alternatively, a bullish trajectory may unfold with the preservation of $42,700. If the buying side successfully maintains Bitcoin above this pivot level, it could initiate a consolidation phase, paving the way for a move towards the next target of $48,900. In essence, the long-term chart underscores the critical significance of the $42,700 average level in determining the cryptocurrency's new direction.Bitcoin Daily Chart

    A closer examination of the uptrend that originated in October, as depicted in the daily chart, highlights the persistent interaction with Fib 0.144 in Bitcoin's horizontal trajectory. The price, currently hovering around $41,500, has found support from purchases below, with particular significance placed on the 21-day exponential moving average serving as dynamic support. Conversely, sellers remain focused on the $44,000 threshold.

    In the short term, Bitcoin's attempt to reclaim the uptrend this week underscores the importance of closing within the $44,000 band for trend continuation. Failure to do so, coupled with a breach of the 21-day EMA value beneath the pivot level and a subsequent break of the second support line around the $39,000 region, could propel the movement towards the $36,500 level, evident in the daily chart with the 3-month EMA value.

    In summary, the $44,000 level emerges as the linchpin for reaching the next target in the $48,000 region. The immediate support line within the $42,000 - $42,700 range assumes a pivotal role in hindering a consolidated downward movement.

    ***

    In 2024, let hard decisions become easy with our AI-powered stock-picking tool.

    Have you ever found yourself faced with the question: which stock should I buy next?

    Luckily, this feeling is long gone for ProPicks users. Using state-of-the-art AI technology, ProPicks provides six market-beating stock-picking strategies, including the flagship "Tech Titans," which outperformed the market by 670% over the last decade.

    Join now for up to 50% off and never miss another bull market by not knowing which stocks to buy!Subscribe Now for Up to 50% Off!

    Disclosure: The author holds no positions in any of the securities mentioned.

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.