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By the end of 2021, the Bitcoin situation should be calmer than expected, but the chances of the green candles melting are still there, analysts say.
Bitcoin started the week at $ 51,000.
Despite concerns that lack of liquidity will trigger increased volatility in spot prices during the holiday season, the opposite is true now – Bitcoin is calm, perhaps too calm.
There were virtually no unusual price movements over the weekend, with a short-term drop below $ 50,000 which subsequently returned to gains.
1-hour BTC / USD candlestick chart (Bitstamp). Source: TradingView
For Twitter trader Pentoshi, this was reason enough to wait for a return to the $ 53,000 level before taking action.
The specialist noted the “pure” nature of BTC / USD on weekly timeframes, and also added in the comments that $ 58,000 could become “the most defining place” for chartists in 2022.
The PlanB analyst is likely to face criticism, however, he remains positive.
The specialist stated:
“I have no doubts that my Bitcoin prediction is correct, and it will reach the price of $ 100-288 thousand by the end of December 2021.”
He later retracted these claims, stressing that standard deviation ranges would dictate any technical invalidation. Thus, stock-to-flow (S2F) and its stock-to-flow (S2FX) child cross-asset remain in play.
Bitcoin stock price chart as of December 27.
After a sell-off earlier this month, open interest in Bitcoin futures has surged again.
In the meantime, concerns have subsided after $ 42,000 of leverage appeared in the derivatives markets. Although leverage has returned, funding rates remain neutral.
Meanwhile, network indicators governing the behavior of buyers and sellers are also showing signs of a potential turnaround.
Annotated chart of Bitcoin net realized profit / loss.
Macroeconomic markets represent a standard set of risk problems, which, however, can also lead to above average moves due to reduced liquidity.
US stocks hit new all-time highs ahead of the Christmas break, ending a landmark year in which the S&P 500 alone set 68 new records.
The US dollar, however, has not yet recovered its previous intense uptrend, and the US dollar currency index (DXY) is set to decline for the rest of the year. This could provide at least some breathing room for Bitcoin traders if the stock also wins.
US Dollar Index (DXY) 1-week candlestick chart. Source: TradingView
Bitcoin traders are getting more scared as 2021 draws to a close
According to the Fear and Greed Index, a popular sentiment indicator that takes into account a number of variables to create an overall impression of a trader’s emotions, the market is far from getting out of the woods – even above $ 50,000.
As of Monday, fear and greed are 40/100, characterizing “fear,” peaking at 45/100 last week.
Fear and Greed Index. Source: Alternative.me
The index showed that sentiment was particularly sensitive to even small price swings after the crash.
Consequently, fluctuations can trigger more emotional trading reactions.
However, under normal circumstances, mass surrenders only occur during periods of “extreme greed,” when the index is 90/100 or more.
Meanwhile, Blockstream’s chief strategist, Samson Moe, became more optimistic and said that most non-professional market participants are too gloomy this Christmas.
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