Bitcoin price analysis 20 Dec: do bulls have a chance?

Bitcoin (BTC) may extend its decline in the short term

Representation of a bitcoin token among a pile of other tokens in front of a candlestick price chart                                 
Will the current bitcoin decline continue? – Photo: Shutterstock
                                

Bitcoin is struggling to rise above the psychological resistance at $50,000, well below the lofty year-end target of $100,000 projected by several analysts. Still, for 2021, bitcoin is up close to 60%, not a mean achievement by any standards.  

Although Jesse Powell, CEO of the California-based digital asset exchange Kraken, is bullish in the long term, he told Bloomberg TV in an interview that he saw further downside in the short term. But Powell said he believed that “a lot of people see anything under $40,000 as a buying opportunity”.

Another bullish voice is that of the chief executive of Galaxy Digital Holdings, Mike  Novogratz, who said in another interview with Bloomberg TV that “$42,000 is a pretty important level… low-40s should hold”.

Bitcoin’s lacklustre closing to the year does not seem to have dented expectations for the next year. A new survey by Bitcoin IRA shows that about a third of the respondents believe bitcoin could reach $100,000  by the end of 2022.

Ray Dalio, founder of the world's largest hedge fund, Bridgewater Associates, told MarketWatch that bitcoin was “almost a younger generation's alternative to gold”. adding: “It has no intrinsic value, but it has imputed value, and it has therefore some merit.”

Could the decline extend further or will bitcoin go up? Let’s see what the charts project. Read our BTC price analysis to find out.   

Bitcoin price technical analysis: weekly chart

A red and green candlestick chart following the ups and downs of the price of BTC
Bitcoin price analysis (20 December 2021), weekly chart – Credit: Currency.com

BTC’s price attempted to rise above the 20-week exponential moving average (EMA) but the bears had other plans. They aggressively defended the level, which could have attracted selling from short-term traders. The BTC/USD pair dropped 6.81% last week to end at $46,685.40. 

The close below the 50-week simple moving average (SMA) and the relative strength index (RSI) in the negative zone indicates that the bears are in control. If the bulls fail to stage a strong recovery quickly, the bears will smell an opportunity and attempt to sink the price below the critical support of $39,565.25.

If they succeed, it may open the doors for a possible decline to the next major support at $28,286.60. Such a deep fall could delay the possible start of the next leg of the up-move.

This negative view will invalidate if the price turns up from the current level and breaks above the 20-week EMA. Such a move will suggest that traders aggressively accumulated at lower levels. 

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The pair could then rise to $60,000 where the bears may again pose a stiff challenge. If this level is scaled, the next stop could be the all-time high of $69,055. The bulls will have to push and sustain the price above this level to signal the resumption of the uptrend.

The bitcoin price analysis shows that bears are in command and a break below $39,565.25 could further cement their advantage. 

Bitcoin price technical analysis: daily chart

A red and green candlestick chart, including a descending channel pattern
Bitcoin price analysis (20 December 2021), daily chart – Credit: Currency.com

BTC’s price continues to trade inside the descending channel pattern. Both moving averages are sloping down and the RSI is in the negative territory, indicating that the path of least resistance is to the downside.

The bears will now attempt to pull the price below the support line of the channel. If that happens, the selling could intensify further and the pair may challenge the critical support zone of $37,282.85 and $39,565.25.

This is an important zone for the bulls to defend because a break below it will dent sentiment and may result in panic selling.

The first sign of strength will be a break and close above the 20-day EMA. Such a move will indicate that the selling pressure could be reducing. The pair could then rise to the 50-day SMA, which may act as a resistance. A break and close above this level could signal that bulls are back in the game.

Bitcoin: Buy or sell at current levels?

The bitcoin price analysis shows that bulls are struggling to push and sustain the price above the psychological level at $50,000. The longer the price remains below this level, the greater the possibility of a sharper decline. A break and close above $51,968.80 will be the first indication that the selling pressure could be reducing.

The views and opinions expressed in the article are those of the author and do not constitute trading advice. Trading and investing involve substantial risks and you should do your own research or contact your financial adviser before arriving at a decision.

Bitcoin to US Dollar
Daily change
16961.2
Low: 16896.3
High: 17036.4

Further reading

The material provided on this website is for information purposes only and should not be regarded as investment research or investment advice. Any opinion that may be provided on this page is a subjective point of view of the author and does not constitute a recommendation by Currency Com Bel LLC or its partners. We do not make any endorsements or warranty on the accuracy or completeness of the information that is provided on this page. By relying on the information on this page, you acknowledge that you are acting knowingly and independently and that you accept all the risks involved.
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