Bitcoin is in rallye mode: bitcoin rallies again above 60.000 heading towards its last all time high back in april this year. Where do we go from here? Let’s have a closer look at the chart, the bitcoin seasonality as well as the COT report for bitcoin.
Several months ago, back in may 2021, the bitcoin world was in uproar: within several hours the bitcoin price shed more than 20% and left hodlers back in agony. They kept asking themselves again and again whether they should stay, buy or sell their coins. As always patience and “waiting for bottom” payed off. At 32K the free fall stopped. Asset managers kept coming in as the COT report showed us and they startet buying bitcoins, while the market tried to bottom out. Having had a look at the past 10 years seasonal pattern of Bitcoin we knew that a bottom is likely to happen between september and october. Whoever wanted to get in a bit earlier would have a look at the COT report that showed the first strong buyers back in july.
Technical Analysis
After bottoming out and re-testing the 100 and 200 moving average, Bitcoin builds an ascending channel and is slightly overbought. The former resistance cluster between 48K and 52K has now become support and is attractive for buyers. This is where Bitcoin will meet again its 100 and 200 moving average.
Seasonality
Having a look an the 10 year seasonal chart of BTCUSD we can see that bitcoin sticks to its pattern where we can expect a bottom between september and october. Where do we go from here? According to the common seasonal pattern the bitcoin price keeps rallying between october and mid-january before a consolidation sets in.
COT Report
Yes, it’s not just commodities that are monitored by the CFTC but even bitcoin! Large traders have to unveil their positions in order to create a fair and transparent market for everyone. Their positioning is reported every friday so COT signals are most valuable on a weekly basis. What does the COT report show us? While the bitcoin itself kept bottoming out between june and july 2021, asset managers came in early and started to build up their portfolios with bitcoin. As you can see from the chart below, one week later the price reaction set in and bitcoin startet its year-end rallye.
Summary
Bitcoin is slightly overbought on the daily timeframe but the overall uptrend is intact. In order to maintain its momentum it should not fall below 48K again. Having considered the cot report and the 10 year seasonal pattern the bitcoin is likely to continue its rallye. You can trade bitcoin and other cryptocurrencies with eToro.