Bitcoin bounces cheerfully up and down a channel of almost a thousand dollars. But what will be the next direction for bitcoin? Can the magic limit of USD 20 000 be broken, or will there be another crash first?
Bull flag can raise bitcoin
We start the analysis with the four-hour chart. A bull flag can push the bitcoin price upwards in the coming days. This price formation is shown on the chart below.
But how do you recognise a bull flag? The meaning is actually already there in the translation. Okay, you don’t see a bull in it. But with a bit of imagination you can see a flag.
The course starts with a rise, the left arrow on the graph. That is the mast of the flag. Then the price moves down between two parallel trend lines, that is the flag. Does the price break out at the top? Then the price target is the same size as the mast of the flag on the left.
In this case the price can rise to as much as 22,700 dollars (18,725 euros). With this, bitcoin finally breaks the magic limit of 20,000 dollars.
Whales want to sell bitcoin
We remain in the animal kingdom, because according to CEO Ki Young Ju of CryptoQuant, an analysis agency, whales want to sell bitcoin. Whales are traders with a large amount of bitcoin. Because they own so many coins, they can exert a lot of influence on the market.
Ki Young Ju’s indicator looks at the moving average of the percentage of whales on regular crypto exchanges. Think of Binance, Coinbase and OKEx. Does this percentage exceed 95%? Then that’s historically wrong. There is a chance that the price will drop.
Kim Young Ju shows an example of the bull run in 2019. When the percentage exceeded 95%, this run was over immediately.
After that, the price moved sideways for months, as you can see on the graph below.
Whether it will turn out that way, is of course the question. According to various analysts, the bull market has really started, and institutional and private investors are on the sidelines waiting for a dip that they can buy up.
Think of parties such as MicroStrategy, this listed company bought another USD 50 million worth of bitcoin on Friday 4 December.
But you can also think of bitcoin investment funds such as Cypherpunk Holdings and Grayscale. The latter fund bought 7,300 bitcoins last week, worth more than 140 million dollars.
What do we expect from bitcoin?
You are now looking at the hourly chart of bitcoin. In fact, since last week the rate has been moving sideways, in a kind of no-man’s-land between USD 18 600 (EUR 15 377) and USD 19 500 (EUR 16 121). There is no real trend, and an outbreak in the coming days may provide more clarity. We describe two scenarios: bullish (positive) and bearish (negative).
Is bitcoin breaking out of the bull flag, and is the course continuing its upward trend? Then the exchange rate target of 22,700 dollars (18,725 euros) can be achieved. That is the green line on the chart.
But if the whales dump their bitcoins on the stock exchanges en masse, $16,465 (€13,616) comes close. That’s the red line on the chart, and the earlier support when the price fell.