Altseason and $30K in sight: 5 things to watch in Bitcoin as 2020 ends

WikiBit|2020-12-28

एब्स्ट्रैक्ट:A Christmas full of cheer for Bitcoin hodlers tops out above $28,000.

XAU/USD daily candle chart. Source: TradingView

“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 striking a fresh tone with a wider audience over Christmas with runs to new all-time highs, Bitcoin may soon have to face the music with the establishment, sources warn.

Hitting $28,400 and capping monthly gains of 55%, Bitcoin is now firmly on regulators radar as its mainstream appeal heightens. Even for its proponents, the next year may prove to be a challenging time.

With outgoing Treasury Secretary Steven Mnuchin leaving his mark with an attempt to force new laws over noncustodial wallets, his replacement, Janet Yellen, may hardly be an improvement, they say.

“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., the patchwork of political allegiances means that any assault may be tempered by the presence of crypto-friendly figures elsewhere. The new chair of the Securities and Exchange Commission (SEC), Elad Roisman, is considered to be a fan.

Bitcoin rebuttal at $28,400"very healthy" — analyst

Concentrating on the latest Bitcoin spot market action, Monday is shaping up to be a major test for bulls given the momentum seen over the weekend.

After hitting all-time highs of $28,400 on Sunday, Bitcoin saw a pullback which many had already expected.

“#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.”BTC/USD hourly candle chart. Source: TradingView

Van de Poppe is eyeing the potential for altcoins to begin their response to Bitcoins 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%.

ETH and BTC vs. USD performance YTD. Source: Digital Assets DataRecord Bitcoin futures gap

Bitcoin is contending with the largest “gap” to ever appear on futures markets this week.

Data from CME Groups futures shows that on Friday, trading ended at around $23,825. Monday began with a wick to lows of $26,500 from opening levels, with the difference ranking as the biggest ever seen in a weekend.

These so-called futures “gaps” refer to the void between Friday and Monday trading sessions, and the BTC/USD spot price has a habit of returning to “fill” them later on.

In recent weeks, however, this trend has weakened, with gaps remaining between $16,900 and $19,500 which have only been partially filled.

This has in turn given rise to theories among analysts — including Cointelegraphs Van de Poppe — that Bitcoin could still reverse downwards to revisit sub-$20,000 levels just long enough to take care of its unfinished business.

Should that not in fact occur, analysts may instead need to come to terms with the loss of what was once a solid indicator of near-term Bitcoin price trajectory.

CME Bitcoin futures chart showing gap. Source: TradingViewStock-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.

Bitcoin stock-to-flow chart. Source: Digitalik

Going forward, the models 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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