Bitcoin preserves the $30,000 so far, but a massive increase in Ether and a drop in BTC’s market dominance set the tone for an increase in altcoins.
Bitcoin (BTC) is almost unrecognizable because it starts the first week of 2021 with support at $30,000 after reaching new astronomical highs.
Hard to believe for the hodlers, the price action continues to impress this Monday, even after the crash and now our attention is focused on what may come next.
The Cointelegraph analyzes five factors that investors should monitor in the coming days, in what is one of the most volatile trading moments in Bitcoin history.
Stocks hit high levels as Bitcoin „turns“ the Dow Jones index
It is another curious week for stocks, since the historical highs reached last week in several indices seem destined to continue this path.
As the first days of the new year approached, the Dow Jones Industrial Average and the S&P 500 reached historic records – despite the Coronavirus continuing to generate increasingly strict isolations around the world.
For the Bitcoiners, the Dow took on a different kind of significance last week, with the BTC/USD „launching“ its 30,600 points for the first time, continuing to reach $34,000.
This week, analysts predict that stocks will rise further, part of a long-awaited recovery that, like last year, appears to be at odds with the situation there.
„A strong vaccine-led recovery in global growth will provide a major boost to cyclical assets, including commodities, cyclical equity sectors and emerging markets,“ Goldman Sachs told Bloomberg as part of its 2021 outlook survey.
„However, the path may be complicated as the market balances the weakness of local growth with a future outlook that is more favourable.
Not everyone was so optimistic. Fidelity, the asset manager known for her pioneering pro-Bitcoin posture, fought back:
„2021 is likely to be about capturing opportunities as investors evaluate economic developments related to the virus“.
Bitcoin vs. stocks correlation chart. Source: Digital Assets Data
Future gaps can be left empty forever
After reaching $34,800 over the weekend, Bitcoin seems to definitely need a period of consolidation as the week begins.
The highs, which still seem unreal to many investors, have many obstacles to overcome in order not to allow Bitcoin to give in to the bears.
One of the most urgent issues for traders is the Bitcoin futures „gap“ produced by the weekend’s volatility. Ranging between $29,695 and $32,400, the gap adds up to what was left last week as one of the largest ever seen on the Bitcoin futures chart.
As the Cointelegraph explained earlier, „gaps“ in futures are the price differences between the end of futures trading on a Friday and the beginning of the following Monday. When strong volatility occurs, the resulting gap often forms a short-term target price.
In this case, Bitcoin has an impetus to retest the levels just under $30,000. If you wish to fill smaller gaps that have not yet been tested, the market may fall further. The gap from last weekend’s gap is $23,800.
Although the previous months have seen many gaps being filled, the idea of a $24,000 Bitcoin is now a remote possibility, according to the popular statistician Willy Woo.
„We’ll never see the BTC again at $20k,“ he predicted on Sunday.
„The $24k support would need a black swan event to be broken. The minimum price supported by long term buyers is going up too fast. ”
The $20,000 itself is an area of interest for those studying gaps, with two large vacuums in the futures markets still open below this significant level.
Difficulty, hash rate on track for new registrations
Bitcoin’s basics are better than ever. After a month of small falls, the network difficulty is once again set to increase to reach new records.
In the next automated readjustment at the end of this week, the difficulty should increase by approximately 5%.
The last two readjustments recorded falls of 2.5% and 0.4%, respectively, an interesting contrast to the rapid increases in spot prices seen at the same time.
The difficulty is arguably Bitcoin’s most important technical aspect when it comes to its „reliable“ cash status, allowing the network to essentially govern itself and be secure, regardless of the miner’s participation or the price action.