Bitcoin

Bitcoin - a stealth bull market towards $20,000

Chris Weston
Chris Weston
Head of Research
Nov 6, 2020
When we look at moves in Bitcoin and across the many crypto instruments we offer, memories of the 2017 crypto mania come flooding back where we’re currently seeing Bitcoin moving in an almost exponential fashion.

Bitcoin has broken above $15,000 and the focus now falls on whether price can gravitate to the 2017 (and all-time) highs and even through $20,000.

As the rate of change in an instrument increases, the Fear of Missing out (FOMO) also rises and is arguably one of the most powerful forces in trading. To many the idea of watching a neighbour get rich is simply too emotive, driving them to take a position and to be involved. This was certainly the case in 2017.

Perhaps due to its relatively poorer liquidity dynamics, the crypto space can have more aggressive moves and therefore traders do need to understand the higher risks involved. That said, there's an art to trading explosive moves and it's fine to miss the start of a rally where the aim is to try and catch the body of the move and where being late can be costly.

The question is whether this recent move is the start of something more prolonged and akin to 2017?

Strength begets strength but even after the recent rally, unlike late 2017 it certainly doesn’t feel like we’re seeing a rampant wave of speculation taking over and we’re clearly not in a mania stage. It’s almost been a stealth bull market with the rapid rise overshadowed by the US election and the moves in the NASDAQ 100 or USD.

We can pick any time frame but the weekly chart paints a strong visual around the rhythm and flow in Bitcoin. We’ve seen price breaking the downtrend from the 2017 high, consolidate and re-test the breakout zone before using this as a platform to accelerate through a series of recent highs. In fact, the set-up looks similar to the moves seen in 2015 before price went onto rally 2000% through to the 2017 highs.

Pullbacks into the 5-day EMA should present themselves as a buying opportunity within this bullish trend and should the move become front page news. The notion of FOMO and momentum will become an ever-greater force. Also consider with the widely adopted use of Bitcoin futures more systematic and institutional funds are involved in Bitcoin and as price moves higher, these trend-following players continue to add to bullish exposures.

The fundamentals behind Bitcoin and the wider crypto space look compelling. There's a solid macro argument to be long crypto with the central bank currency debasement theme only getting ever more powerful. The adoption story is gaining momentum with various central banks studying the use of digital assets for certain payment functionality, while investment firm Fidelity recently said that of 774 respondents (in an institutional investor survey) 36% detailed they hold either Bitcoin or Ethereum.

Investor numbers more broadly are on the rise, not just in the institutional world and the cost to trade and ease by which you can trade cryptos has never been cheaper or easier.

Trade Bitcoin long or short from a $10 spread as well as other crypto products, putting down just 5% of the usual face value and without the hassle of setting up a wallet.

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