The monthly Bitcoin candle close signals a possible mega rally in December

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In the past, when a monthly Bitcoin (BTC) candle closes above the previous candles, the digital asset has rallied longer.

On this lofty timeframe, Bitcoin’s monthly candle closed above $ 13,000 for the first time since 2017. Additionally, the predominant cryptocurrency has shown signs of a noticeable breakout in the past two months.

BTC / USD monthly chart. Source: TradingView.com

Why Bitcoin is on the cusp of a new rally

With regard to the “BTC rally”, the timing for a new Bitcoin rally makes sense. First, and perhaps most importantly, Bitcoin is currently on a halving cycle.

Every four years, Bitcoin undergoes a block reward halving, reducing the rate at which new BTC is mined by 50%.

The price of BTC typically peaked 14 to 16 months after halving in the last two cycles. Therefore, a highlight for the next big rally in mid-2021 would be historically relevant.

Second, as Cointelegraph reported, there is little interest from mainstream and new retail investors. Most of the demand for Bitcoin appears to come from whales, high net worth individuals, and what analysts call “smart money.”

BTC futures volume after exchange. Source: Digital Assets Data

As shown in the graph above, this increased stake is also reflected in the increasing volumes in Bitcoin derivatives markets such as CME, Bakkt and LedgerX, as well as centralized exchanges that offer futures trading.

In 2017, Bitcoin flowed massively to the US, South Korea, and Japan. As a result, spot volumes exploded within a short period of time, bringing BTC to $ 20,000.

This time around, although spot market volume is growing rapidly according to data from Digital Assets Data and Arcane Research, the mainstream interest this time around is nowhere near 2017.

Monthly BTC Transaction Volume (USD). Source: Digital Assets Data

Hence, there is scope for a broader rally for the foreseeable future, especially if retail interest rises.

What could restore mainstream appetite?

Three years ago there was a general madness about bitcoin and cryptocurrencies in general because they rose significantly higher than stocks and other risky assets.

New retail investors were drawn to the unprecedented volatility cryptocurrencies, which caused Bitcoin to soar to a new all-time high.

Bitcoin is currently showing a parabolic upward trend, with it rising on the weekly and monthly charts without major setbacks. The sheer momentum of BTC, if it continues to increase without major correction, could lead to a revival of mainstream interest.

As traders and analysts point out, investor perception of Bitcoin is improving noticeably as more and more large companies and billionaires add BTC to their portfolios.

As Cointelegraph reported, billionaire hedge fund investor Stan Druckermiller was most recently the youngest high profile investor to announce its investment in Bitcoin.

Given this trend, Michaël van de Poppe, a full-time trader on the Amsterdam Stock Exchange, said that market sentiment would likely remain bullish. He wrote:

“Now that Michael Saylor and other companies have allocated money to #Bitcoin, it is time for Stan Druckermiller. It’s only a matter of time before the next one steps in and the next and the next. Generally bullish. “

Bitcoin price is showing resilience after hitting $ 15,000 for the first time since 2017. After the big uptrend, historical evidence suggests a broader rally could take place in December.