Eugene ChumTue, Jul 13, 2021 3:08 PM
Orbuculum: Bitcoin 2021 Analysis and Price Prediction
In this price prediction, we are going to break down the recent price developments in the BTC/USD trading pair and make a Bitcoin price prediction for the fourth quarter of 2021. And if you want to know if the price of Bitcoin will go up in the medium term, you will find the answers further.
To analyse the BTC/USD price, we are going to refer to the Bitstamp price rate of BTC/USD.
Analysis of Bitcoin’s price correction in 2021
After having peaked to $64’000 in May 2021, Bitcoin plummeted down, having lost half of its valuation along the way. The sharp fall was largely due to Elon Musk's tweet about Tesla's refusal to accept Bitcoin as payment for its cars because of the negative environmental impact produced by Bitcoin mining. This allegation caused many United States-based Bitcoin holders to dispose of the major cryptocurrency, and then more stakeholders joined the panic sale.
As a matter of fact, BTC/USD plunged to the 4-hour support level at 34’967 on 23rd May and was eventually upheld by it. A slight recovery followed the fall, stabilising Bitcoin in the region of 34’967 – 40’000 until mid-June. On the 7th of June, Bitcoin managed to break down below the support level on the daily timeframe. This opened the way to the 2.618 Fibonacci level at 30’897.
Bitcoin’s correction in May – June 2021, daily timeframe
Then towards the end of June, the authorities of Chinese province Sichuan sanctioned the closure of its major Bitcoin mining pools, which accounted for 15% of Bitcoin's hashing power. This might have put more fuel to the fire, encouraging Bitcoin's steep decline, as its block time grew to 23 minutes on the average from the arbitrary 10 minutes.
On 22nd June, Bitcoin even sank below 30’000 but had rebounded into the green by the end of the trading day. Before the end of June, Bitcoin attempted a recovery above 34’967, but that one was checked by the sellers, with the price ending the month on the level. This confirmed that the 34’967 level had become resistance.
From the start of July, BTC/USD was steadily trending down, being pressured by the 20-day SMA. And the price range was being narrowed to the region between 32’000 and 34’967, the latter consistently suppressing attempted upside reversals.
BTC/USD being pressured by the 20-day SMA, daily timeframe
Bitcoin price prediction for Q4 2021
In the current state of things in the BTC/USD chart, an exit out of the sideways trend could look to be a viable option in the next few weeks. Speaking of likelihoods, a breakdown below the 2.618 Fibonacci retracement level looks to be the likeliest one as all recent upside moves have been rejected by the 20-day SMA, and that increases the likelihood of the price being edged down to the 2.618 Fibonacci level by the 20-day SMA. And when the pressure grows, a breakdown below the 2.618 Fibonacci level would only be a logical thing.
And if the BTC/USD price breaks down into the region of 20’000s, there will be no primary support until the 1.618 Fibonacci retracement level at 20’383, with an area of technical support being present at around the 18’000 mark.
However, if a breakthrough above 34’967 were to happen, it might not necessarily be a real bullish reversal because one would require the previous high at above 40’000 being topped out by the next one. If that does not happen, the sideways channel might stretch on.
In this situation, Bitcoin seems to be gaining more long-term buyers willing to increase their long-term allocation in Bitcoin while short-term selling bias still persists. Considering the simple trading logic of buying the fall, buying Bitcoin in July 2021 looks to be a rational investment decision. However, some more waiting for the Bitcoin price to decrease even more would be another reasonable move. What you should not do now is short Bitcoin as it is well past the initial stages of its downside retracement.
Speaking of potential buying levels in the near future, the region between 22’720 and 18’000 is a very secure zone for a buying entry order. If that gets reached, the 4-hour level at 34’967 and the area at around 60’000 might be two good take profit options for the end of 2021 – Q1 of 2022.