Bitcoin price analysis for December 14-20: shallow correction suggests further upside in the short term

Bitcoin could pick up momentum after it rallies above $20,000 because FOMO might force traders sitting on the sidelines to jump in

Insurance firm MassMutual recently announced the purchase of about $100m worth of Bitcoin. The 169-year old firm is one of the most conservative institutions to have jumped on the Bitcoin bandwagon. This shows that institutional investors are convinced about the future of Bitcoin. 

In fact, business intelligence firm MicroStrategy is so bullish that it raised $650m worth of convertible bonds at a rate of 0.75 per cent due in 2025. The company wants to use the net proceeds from this sale to purchase Bitcoin, after identifying working capital needs and other general corporate purposes.

Galaxy Digital founder and CEO Mike Novogratz said in an interview with CNBC that every institution will be forced to buy Bitcoin. Therefore, Novogratz advises allocating about five per cent of one’s net worth in Bitcoin.

The inflow of institutional money has kept Bitcoin’s price near the all-time high. But can Bitcoin extend its uptrend or is it showing signs of tiring out? Let’s do the Bitcoin price trend analysis of the weekly chart to find out.

Bitcoin price technical analysis: weekly chart

The long tail on the previous week’s candlestick shows accumulation by the bulls at lower levels. Although Bitcoin dipped to a low of $17,559.50 last week, it recovered sharply and closed at $19,162.15, with a marginal loss of 1.10 per cent.

The failure of the bears to even pull the price down to the 38.2 per cent Fibonacci retracement level at $16,068 shows aggressive buying by the bulls on minor dips. The bulls will now try to propel the price above the psychological barrier at $20,000.

If they succeed, the BTC/USD pair could start the next leg of the uptrend. If the price sustains above $20,000, the retail traders who had been waiting to buy on dips may give up and jump in to buy at higher levels.

The upsloping moving averages and the RSI in the overbought territory suggest that bulls are in control. A close above $20,000 may open the doors for a rally to $25,000.

This bullish view will be invalidated if the price turns down from the current levels and plummets below $17,559.50. Such a move could start a deeper correction that may reach the 20-week EMA at $14,151.

The Bitcoin price weekly analysis shows that the bulls are buying aggressively on dips but can they drive the price above the $20,000 resistance? Let’s do the BTC price analysis of the daily chart to find out.

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Bitcoin price technical analysis: daily chart

Bitcoin dipped below the 20-day EMA on December 9, 10, and 11. However, the bears could not capitalise on this break and pull the price towards the 50-day SMA. This shows a lack of sellers at lower levels.

The failure to sink the price lower could have attracted aggressive buying by the bulls who pushed the price back above the 20-day EMA on December 12. 

However, the bears are unlikely to throw in the towel just yet. They will try to stall the up-move in the $19,500 to $20,000 resistance zone. 

If the price turns down from this zone, the pair could remain range-bound between $17,500 and $20,000 for a few more days. The trend will turn in favour of the bears if the price breaks and sustains below $17,500.

Conversely, if the bulls can push the price above $20,000 the next leg of the up-move may begin.

How to trade Bitcoin this week

The strong buying at lower levels shows that bulls are accumulating on dips. However, the bulls will have to push the price above $20,000 for the next leg of the uptrend to begin.

Hence, traders can consider initiating long positions as suggested in the previous analysis. Contrary to this assumption, if the price turns down and breaks below $17,500, traders can remain on the sidelines until the decline ends.

Bitcoin to US Dollar
Daily change
17115.5
Low: 17098.6
High: 17263

FURTHER READING: Bitcoin explained simply: everything you need to know

FURTHER READING: Bitcoin vs Bitcoin Cash vs Bitcoin SV: the ultimate guide

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