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Bitcoin price prediction for January 2020: will it bounce into next month?

By David Becker

If momentum begins to slow, January could be a month where Bitcoin will rebound.

As the second half of December commences, Bitcoin prices remain under pressure. The lack of a US ETF that allows retail traders to take positions, in conjunction with one of the largest cryptocurrency scams in China, has created a dark cloud that continues to hover over Bitcoin. The technicals show that negative momentum is accelerating but prices are oversold and could bounce into January.

Bitcoin price this month: the unwinding of a scam

The unwinding of one of the largest cryptocurrency scams in history continues to weigh on Bitcoin prices and likely was a factor that capped 2019 prices. After hitting a high in late June, prices have declined by more than 50 per cent. The PlusToken scandal in China saw more than 2-billion in PlusTokens hit the market, which has created a dark cloud over the cryptocurrency market.

News of the scandal was likely the catalyst for Bitcoin’s peak in late June 2019. Chinese authorities arrested multiple suspects in a pyramid scheme that promised returns as high as 600 per cent and guaranteed that investors would receive additional benefits. Bloomberg reports that PlusToken conspirators sold about 45,000 Bitcoin spread out across more than 8,700 anonymous crypto addresses.

Bitcoin price analysis: the technicals

The daily technicals continue to point to lower prices. The trend is lower and negative momentum is accelerating. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) index recently generated a crossover sell signal. The MACD is a momentum indicator that uses different moving averages to reflect accelerating positive and negative momentum.

BTC to USD chart

The signal occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is now printing in the red with a downward sloping trajectory, pointing to lower Bitcoin prices.

Short-term momentum is also negative but is decelerating. The fast stochastic, which is a momentum oscillator, is attempting to form a bottom. The current reading on the fast stochastic is 10, well below the oversold trigger level of 20 which could foreshadow a correction.

The relative strength index (RSI), a momentum oscillator that provides overbought and oversold levels, is diving into the oversold trigger zone below 30, which also could foreshadow a correction. The RSI does not look like it will accelerate below the lows made in November which may point to a divergence where prices are declining but momentum has stopped falling.

Bitcoin price in January: take away

Bitcoin is the benchmark for cryptocurrencies and the Chinese scam likely generated the negative sentiment that was the impetus for the large selloff beginning in July. As this unwinds, investors are more likely to enter the Bitcoin market. Negative momentum continues to accelerate, but prices are oversold and could be pointing to a bottom. If momentum begins to slow, January could be a month were investors experience a rebound in Bitcoin prices.

FURTHER READING: Bitcoin price prediction 2020

FURTHER READING: Bitcoin explained

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