Nearly 11 months into a bear market that has seen the bitcoin price take a two-thirds haircut from its all-time high, the flagship cryptocurrency could be on the verge of a year-end rally.
Mati Greenspan, senior market analyst at eToro, has been watching for a bitcoin breakout for some time now, and he said in market commentary made available to CCN.com that there are early indications that cryptocurrencies will see a “Santa Claus rally” heading into the new year.
“In traditional markets, it’s very common to see a stock rally leading up to the end of the year due to the increased activity in the private sector during the holidays,” he wrote. “It may be too early to say this, after all we’ve only seen very moderate crypto gains this week, but it is very possible that we might see a Santa Claus rally in the crypto markets.”
Notably, Greenspan identified the looming Bitcoin Cash hard fork as the catalyst for this rally, noting that the BCH price had exploded in advance of the Nov. 15 fork, which seems likely to split the network into multiple competing versions.
“The gains are being led by Bitcoin Cash ahead of the hard fork next week. It’s kind of funny to see that after all this sideways movement, a possible break out could come from a disagreement in the BCH community of all places,” he said.
“In any case, the fire doesn’t usually care where the spark came from. Upward momentum has a way of snowballing in financial markets no matter what the drivers of that momentum may have originally been.”
Greenspan tempered his bullish outlook with the qualification that he believes bitcoin needs a strong breakout above its 200-day moving average (DMA), which is currently sitting at $7,068, to truly put the bear trend in its rearview mirror.
However, he isn’t the only analyst pounding the table on bitcoin’s technical indicators. Earlier this week, Bloomberg reported that bitcoin’s directional movement index (DMI) had entered a bullish phase and that its price trends had broken out of their VERA band upper limit. Moreover, the moving average convergence divergence (MACD) gauge for the Bloomberg Galaxy Crypto Index — which features a heavy BTC weighting — recently entered positive territory for the first time in a month.
Featured Image from Shutterstock. Charts from TradingView.
Last modified: March 4, 2021 3:07 PM