Another $1,000 CME futures gap opens but Bitcoin shows clear strength as it aims to tackle pivotal $20,000 resistance.
Bitcoin (BTC) begins a new trading week within 5% of the mythical $20,000 price level — but can it get there this time?
As the largest cryptocurrency lines up for another shot at overcoming seminal resistance, Cointelegraph looks at the market factors influencing price performance on Monday.
Vaccine, stimulus decision fuels risk appetite
On a wider macro level, talk is firmly focused on the United States agreeing a coronavirus stimulus package this week.
A major test of the dollar’s strength, negotiations have “no guarantee” of being successful, one government aide told mainstream media, but the cost of the package under discussion is around $900 billion.
As Cointelegraph reported, this will contain benefits for various economic sectors, but will crucially not involve a second stimulus check for ordinary Americans.
Prospects of both a stimulus package and vaccine rollout have helped buoy a flagging dollar, but for the meantime, risk assets are recovering.
These include stocks, with the Japanese market beating two-year highs in early trading on Monday. Oil is also on the rebound, nearing $47 a barrel amid hopes that the vaccine will spur fresh demand.
For Bitcoin, however, any major boost to USD is always a concern — 2020 has been characterized by the inverse correlation between BTC and the U.S. dollar currency index (DXY).
At press time, however, DXY was falling away from 91 points once more, still not far from its lowest levels since April 2018.
This week will also see fresh guidance from the U.S. Federal Reserve about its virus-related economic response, with the dollar potentially moving in step with any major updates.
BTC price rebounds to crucial resistance
Within Bitcoin, the weekend has continued what is a relatively recent phenomenon for price action — more happening on Saturday and Sunday than during the week.
After a lackluster five days’ trading, BTC/USD rallied after Friday, rising from near $18,000 to highs of $19,400.
The move is conspicuous, with fresh gains leading to another round of confidence votes from various familiar investors.
“Bitcoin quietly tiptoeing above $19K. No big deal. Nothing to see here,” Gemini exchange co-founder Cameron Winklevoss summarized on Sunday.
At press time, BTC/USD circled $19,150, having seen its rally stall at the start of upper resistance at $19,400. The level is highly significant, coinciding with definitive selling pressure in a $600 window which ends at the almighty $20,000.
A previous attempt to take $20,000 swiftly failed, resulting in last week’s lows of $17,550. A look at exchange orderbook data shows the sell bids intact in the same place. Conversely, should $20,000 finally break, little resistance remains until $22,000 — currently Bitcoin’s final price hurdle.
“We do see that we’ve made another higher low, which makes it very likely that we’re going to achieve a new all-time high in the coming weeks if $19,400-$19,500 breaks,” Cointelegraph Markets analyst Michaël van de Poppe added in an update on Sunday.
“However, traders should be aware that there is a possible likelihood of a ‘fakeout’ above this recent high, through which a bearish divergence starts to be applied and further rangebound continuation is likely.”
#Bitcoin rallying during the weekend towards the all-time high region.
What are the crucial levels to watch? This small video from @CryptoMichNL explains the levels.
— Cointelegraph Markets (@CointelegraphMT) December 13, 2020
Another $1,000 futures gap joins the party
Countering the hope of a $20,000 showdown meanwhile, the weekend has ironically unleashed another “gap” in Bitcoin futures markets, providing downward pressure.
Roughly $1,000 in size, the difference between the end of Friday and the start of Monday trading for CME Bitcoin futures markets gives a lower price target of $18,100.
As Cointelegraph has previously noted, these “gaps” traditionally get filled soon after they appear, but the size of the two now open has presented difficulties. The previous $1,300 gap, almost unrivalled in size, was only half closed with the run to $17,550.
“Remember, $BTC may need to close the CME futures gap at $16,925 before we see new all-time highs,” forex trader Justin Bennett, founder of DailyPriceAction, said about that gap.
In analysis for Cointelegraph, Van de Poppe likewise highlighted the gaps as a continuing phenomenon to track.
“A new CME gap will be created as the recent closing price is $18,115. As such, this futures gap will likely become a significant point for entry or exit, which is why such gaps frequently become a self-fulfilling prophecy and get filled,” he confirmed.
“There are two open CME gaps from recent price action. The first one didn’t fill completely as there’s still open air at $17,015. The second one at $18,115 will be created due to the weekend’s bullish price action.”
Institutional interest boosts Bitcoin’s image
Institutional uptake meanwhile continues to buoy sentiment and give Bitcoin positive publicity in the mainstream.
Last week’s announcement from insurance fund MassMutual, involving a $100 million allocation, has led to further compliments from previous arch Bitcoin skeptic JPMorgan. This was not lost on the wider establishment, with Bloomberg quoting the bank’s strategists forecasting further buy-ins.
“MassMutual’s Bitcoin purchases represent another milestone in the Bitcoin adoption by institutional investors,” one said.
“One can see the potential demand that could arise over the coming years as other insurance companies and pension funds follow MassMutual’s example.”
Markets commentator Holger Zschaepitz subsequently noted that MassMutual was causing a particular stir as it has a more “traditional investor” focus.
“Wholecoiner” wallets hit record numbers
Away from the big players, however, evidence of the “big buy-in” is mounting.
According to statistics from on-chain analytics resource Glassnode, the number of Bitcoin wallets containing a whole coin or more is at a new all-time high. As of Sunday, almost 827,000 wallets had a balance of 1 BTC or more.
The difficulty in accruing a whole unit of Bitcoin has become an increasingly hot topic on social media amid the corporate investment narrative. This has combined with data showing that despite recent price rises, coins continue to leave exchanges for cold storage.
The result is that investor sentiment is being gauged as long-term “HODL” over short-term speculation.