In the midst of alerts that Bitcoin is already in the crosshairs of regulators for 2021, a Christmas full of cheers for hodlers tops out at $28,000.
Bitcoin (BTC) had a week like no other, reaching $28,400 in fresh record highs and remaining near the top.
As markets return to digesting a crazy Christmas, this week, here are five factors expected to assist with Bitcoin price direction.
Gold surges as Trump signs stimulus bull
This week, markets were spared a disaster after the U.S. President Donald Trump decided to sign off on a $900 billion coronavirus stimulus bill from Congress.
Set to add a significant amount of debt to the current mountain of the Federal Reserve, the programme provides several business incentives, but falls short of providing Americans with the same degree of direct financial assistance seen in March.
Trump had said that the second stimulus’s low direct payment sum, $600 against $1,200 last time, meant that he could not condone it, but changed his mind afterwards.
Markets have thus begun a new week on a positive note, with modest gains seen prior to the Wall St. open on S&P 500 futures.
Gold has returned in style at the same time, with data illustrating that the precious metal is now on track for its greatest one-year increase in a decade.
XAU/USD is up $111, or 6.25%, compared to the end of November.
“As President @realDonaldTrump vetoed just nine bills, the fewest number since Warren Harding, who served just two years, from 1921-1923,” gold bug and infamous Bitcoin naysayer Peter Schiff tweeted as the bill was signed.
“Not since Chester Arthur (1881-1885) has a president who
served a full term vetoed fewer bills. You can’t drain the swamp by making it deeper.”
Regulations coming for mainstream Bitcoin
After reaching a fresh tone with a broader audience over Christmas with runs to new all-time highs, Bitcoin will soon have to face the music with the establishment, sources say.
Hitting $28,400 and capturing 55 percent monthly gains, Bitcoin is now squarely on the radar of regulators as its mainstream appeal grows. And for its supporters, the next year may prove to be a difficult time.
With outgoing Treasury Secretary Steven Mnuchin leaving his mark in an effort to impose new laws on non-custodial wallets, his successor, Janet Yellen, could hardly be an upgrade, they claim.
“Generally, I think we have had challenges with the Dems — they prefer more regulation, more oversight,” Meltem Demirors, chief strategy officer at digital-asset manager CoinShares, told Bloomberg on Sunday.
“I am a bit worried about the direction things are trending.”
As always in the U.S., a patchwork of political allegiances ensures that any attack can be offset by the involvement of crypto-friendly figures elsewhere. Elad Roisman, the current chair of the Securities and Exchange Commission (SEC), is known to be a fan.
Bitcoin rebuttal at $28,400 “very healthy” — analyst
Focusing on the latest bitcoin spot market activity, Monday is expected to be a big bull test, considering the momentum seen over the weekend.
After reaching an all-time high of $28,400 on Sunday, Bitcoin saw a pullback that many had already anticipated.
“#Bitcoin undergoing a very healthy correction as it went quite vertical. Might be the temporary top for now,” Cointelegraph Markets analyst Michaël van de Poppe summarized on social media.
“What’s next? Consolidation, sideways action, less volatility. Giving space to the rest of the markets to pace up. $BTC pairs doing well.”
Van de Poppe is eyeing the potential for altcoins to begin their response to Bitcoin’s recent glories, arguing that signs are already beginning to appear that “altseason” is around the corner.
“After #Bitcoin finishes the run (and it is quite vertical), the money will flow towards large caps. And after that towards mid-caps and small caps,” he continued.
“Altcoins are not dead, the money flow is still the same.”
While floundering against BTC, some popular altcoins are still delivering significant returns in USD terms, with market leader Ether (ETH) trading above $700 for the first time since May 2018. Versus its lows of $113 in March, ETH/USD is now up 530%.
Record Bitcoin futures gap
Bitcoin is competing with the biggest “gap” ever to appear on futures markets this week.
Future data from the CME Group shows that on Friday, trading finished at about $23,825. Monday started with a wick to a low of $26,500 from the opening stage, with the gap ranking as the biggest ever seen on the weekend.
These so-called futures “gaps” apply to the void between Friday and Monday trading sessions, and the BTC/USD spot price has the habit of returning to “fill” them later.
However, this pattern has deteriorated in recent weeks, with gaps remaining between $16,900 and $19,500 still partially filled.
This, in turn, has given rise to theories among analysts—that bitcoin could indeed reverse downwards to revisit sub-$20,000 levels only long enough to take care of its unfinished business.
If it doesn’t actually happen, analysts will instead need to contend with the loss of what was once a solid predictor of the near-term Bitcoin price trajectory.
Stock-to-flow forecasts the high
On the topic of price trajectory, the latest action puts Bitcoin at odds with one of its best-known and most reliable price models — stock-to-flow.
After rising to hit exactly what the model’s demands last week, the weekend ensured that BTC/USD outperformed, with Sunday’s retracement to the mid $26,000 range ensuring compliance swiftly returned.
As noted by both its creator PlanB and Saifedean Ammous, author of “The Bitcoin Standard,” Bitcoin is overall staying highly faithful to what stock-to-flow requires on an almost daily basis.
“Bitcoin’s price continues to track the predicted value from @100trillionUSD ‘s stock-to-flow model with astonishing precision,” Ammous summarized.
Going forward, the model’s various incarnations demand price levels of anywhere between $100,000 and $576,000 between now and the end of the current halving cycle in 2024.
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