What’s next for the price of Bitcoin? BTC continues to stagnate below $18,000

The fall of Bitcoin is limited in the short term, as BTC is trying to recover from a severe setback.

Over the past few days, sales pressure from all parties has intensified. The Bitcoin miners have sold their properties on a scale not seen for more than three years. In addition to this, the influx of BTC associated with the whales in the exchanges has increased considerably. The combination of the two data points indicates that the miners and the whales have been selling in tandem.

Bitcoin continues to operate below $18,000 after a week of aggressive selling of whales, miners and possibly institutions. Analysts generally believe that the $19,000 region was a logical area for investors to make a profit, and as such, a setback was healthy. By the end of December, price analysts expect the fall in Bitcoin Code to be limited and to follow a gradual upward trend.

The recovery of the US dollar has been another potential catalyst that could have contributed to the short-term correction of Bitcoin. After a decline of several months, the US dollar index (DXY) recovered. The dollar’s recovery may have been driven by news of Pfizer’s impending vaccine distribution and the prospect of a widespread economic rebound in 2021. When the value of the US dollar increases, alternative value reserves such as Bitcoin and gold fall.

Bitcoin’s price correction continues, dashing hopes of reaching $20,000 by 2020

Although the confluence of the rising dollar, the influx of whales and a higher level of miners‘ sales probably caused the price of Bitcoin to fall, some believe that the likelihood of a stable upward trend for Bitcoin remains high.

The drop is limited, and the outlook for December remains bright

Speaking to Cointelegraph, Denis Vinokourov, head of research at the BeQuant cryptomoney exchange, said the sales pressure on Bitcoin may have come from two additional sources. First, Wrapped Bitcoin (WBTC) was burned throughout this week, which meant that the BTC used in the DeFi ecosystem was sold. Second, the hedge flow in the options market added more short-term selling pressure.

Given that unexpected external factors probably pushed the price of Bitcoin down, Vinokourov expects the drop to be limited in the short term. He also stressed that the uncertainty surrounding Brexit and the US stimulus would eventually affect Bitcoin in a positive way, as the appetite for risky assets and alternative value reserves could be restored:

„The uncertainty about Brexit and the U.S. stimulus plan may be disturbing at first, but in the long run it may be positive in net terms. Therefore, it is to be expected that the drawbacks will be limited and that stability will resume“.

Guy Hirsch, US Managing Director at eToro, told Cointelegraph that Bitcoin has seen sales everywhere in the last few days. But with Bitcoin’s strong performance in December, based on the historical bullish cycles, he anticipates that buyers will accumulate BTC during the big drops.

In 2017, for example, Bitcoin saw high volatility and turbulence approaching the end of the year. But in late December, the dominant cryptomone saw an explosive upward movement, reaching an all-time high of nearly $20,000. Since then, Bitcoin has surpassed that figure, but has not remained above it. If BTC’s selling pressure decreases in the coming weeks, BTC could be on track to close the year on a high note, according to Hirsch:

„Bitcoin has suffered some selling pressure from all sides, but the long-term outlook remains extremely bullish. We may see a little more slippage towards the end of the year, but many investors see these falls as buying opportunities and they’re likely to prevent Bitcoin from correcting itself as dramatically as the last time it rose above $19,000 in December 2017.

Positive institutional sentiment is vital

In recent months, institutions have accumulated large amounts of Bitcoin. Recently, MassMutual, the life insurance giant, bought $100 million of BTC. These purchases by institutional investors represent a direct demand for Bitcoin. But more importantly, they create a precedent and encourage other institutions to follow suit.

Based on the current trend of institutions allocating a fraction of their portfolios to Bitcoin, this implies that such an agreement is not a good idea.