Bitcoin (BTC/USD) Price Outlook:
- Bitcoin bulls regained control over the quiet holiday period, briefly pushing the cryptocurrency above $28,000 for the first time in history
- With prior highs surpassed, subsequent resistance becomes more difficult to identify
- Still, gains established in unusual trading conditions could be vulnerable when the market reawakens
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Bitcoin Price Forecast: BTC/USD Soars to New Heights. Where to Next?
Bitcoin enjoyed another holiday rally, this time surging well beyond prior records to trade above $28,000 for the first time in history. Registering an intraday high near $28,330 on December 27, the largest cryptocurrency by market cap has extended its rally in the year-to-date to roughly 280%. While substantial, recent gains were established under unique holiday trading conditions that may leave them vulnerable in the days ahead.
Bitcoin (BTC/USD) Price Chart: Daily Time Frame (November 2017 - December 2020)
Similarly volatile price action could be observed during the Thanksgiving period in the United States, when Bitcoin experienced a considerable pullback before rallying to recoup losses just hours later. While volatile price action is certainly not unusual in markets, the cryptocurrency market remains in a league of its own in terms of the magnitude of volatility.
In the late-November turbulence, BTC/USD fluctuated by more than 20% in a matter of hours, while price surged nearly 20% from Christmas day to December 28. To be sure, price movement of this magnitude is nothing new in the cryptocurrency market, but it does remain a rather unique characteristic that can be exacerbated when liquidity is low. Thus, Bitcoin may have to negotiate continued volatility in the days ahead until the market fully reawakens in the New Year.
Bitcoin (BTC/USD) Price Chart: 4 - Hour Time Frame (November 2020 - December 2020)
That being said, the longer-term outlook remains encouraging. While recent gains may be vulnerable to shorter-term pullbacks, the establishment of a new all-time high is fresh evidence the Bitcoin rally might look to continue into 2021. As price soars higher, technical levels of note become more difficult to identify given the lack of past price action at the current altitude.
Nevertheless, Bitcoin bulls may encounter resistance around the $30,000 mark, which is not only a clean psychological figure, but also coincides with the 161.8% Fibonacci level derived from the sequence drawn off the coin’s 2017 high to 2018 low. Beyond $30,000, bonafide technical barriers become rather sparse - in my opinion. In the meantime, keep up to date on recent price developments and analysis using Twitter by following @PeterHanksFX.
--Written by Peter Hanks, Strategist for DailyFX.com
Contact and follow Peter on Twitter @PeterHanksFX
