Cryptocurrency Analysis

[IFX_Selena]

Bitcoin's growth potential has been exhausted: "whales" fix profit, BTC moves to local low

The cryptocurrency market had high hopes for the fourth quarter of 2021. The historical context and fundamental factors, along with the ATH update in November and the growth of on-chain activity, pointed to a rally to $100k per coin. However, as a result, a situation has developed when the cryptocurrency is at a crossroads: BTC can go to local lows and start a bear market or continue the accumulation period, after which it can reach new highs. I am inclined to the second scenario, but there is no denying that there is practically no hope of updating the maximum in 2021.

Uncertainty of the "whales"

The main reason to believe so is profit-taking by "whales," whose indicators correlate with the fall in the asset price. This pattern was noticed by Saniment experts, and this indicates the uncertainty of long-term holders and large capital in the continuation of the bull market. It is likely that this is a temporary phenomenon, but the profit-taking of more than $1.8 billion over the past week confirms the fact that the bulls will not be able to accumulate the volumes necessary for growth.

The decline in the activity of large companies indicates the lack of prospects for the growth of BTC, since it was the institutional audience that was behind the rally of the coin in 2021. In addition, additional volumes of cryptocurrency exert pressure on the price, and therefore I expect a retest of local lows in the next two weeks.



Current situation of BTC/USD

As of 11:00 UTC, the main cryptocurrency has fallen in price by 3% over the day and is trading around $47.3k. Bitcoin failed to develop bullish momentum and go beyond the range of $48k-$50.5k, where the line of the 50-day simple moving average and resistance of $50.2k passes. At the same time, the bears' positions strengthened, thanks to which the BTC/USD quotes managed to move one step closer to a decline in the range of $42k-$45k.

The coin is trying to recover, but consolidation above the 0.236 Fibo level with the upper limit at $48.6k looks unlikely due to the lack of buyer activity and a decrease in the accumulation rate after Monday's decline. Bulls are trying to make a bullish breakdown of the "descending triangle," which in theory can develop momentum and help the price gain a foothold above $48k.

Technical indicators support this mood of buyers, but the current consolidation period is characterized by the implementation of false breakouts, so it is not worth drawing conclusions ahead of time. I assume that the cryptocurrency will spend the rest of December in the wide range of $40k-$50k with sharp changes in local price movement ranges.



What's next?

Given the absence of a fundamental positive background and active demand, Bitcoin will end 2021 under the auspices of a long accumulation with parallel attempts by bears to bring the price to the local bottom. This is indicated by the daily chart, where the dominance of bears and timid attempts of bulls to win back the fall are visible. I do not see any prerequisites for the interception of the initiative by buyers, on the contrary, I assume an aggravation of the profit-taking process as we approach the end of 2021.

The final week will be especially difficult, as I expect increased pressure from sellers to close the monthly candle below $45k. The final point of the corrective movement is the mark of $39.7k-$40k, where the line of origin of the previous wave of growth passes.



At the same time, I expect a resumption of demand for Bitcoin in early 2022. Most likely, the growth of interest in the coin will be associated with the next stage of the global economic crisis after the collapse of the Fed's emergency stimulus program.

In the short term, the asset has already played back the negative effect of the "closure of the printing press." Now we should expect investors to reorient to riskier assets due to the lack of prospects for classical financial instruments.

With this in mind, the second half of the first quarter of 2022 may become a period of a powerful bullish rally of the coin. The first half of the three-month period will be spent on stabilization, restoration of quotes, and accumulation of the necessary volumes of BTC coins.






Artem Petrenko
Analytical expert of InstaForex
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