Bitcoin Likely to Consolidate Before December Rise Toward $20K, Say Analysts

After the recent rapid rally, the bitcoin (BTC) market is likely to take a breather before continuing its rise toward the end of the year, analysts told CoinDesk.

“The cryptocurrency may consolidate for a short period before moving higher into Christmas,” said Chris Thomas, head of digital assets at Swissquote Bank.

Indeed, further notable gains look unlikely in the short term, as the cryptocurrency’s 60% rally from $9,800 to $15,900 seen over the past two months looks overstretched, per the technical charts. Both the 14-day and 14-week relative strength indices are hovering well above 70, indicating overbought conditions and scope for consolidation or minor pullback.

Others suggest bitcoin may be heading for more than consolidation. “Bitcoin is overbought after surging through critical resistance at $14,000, which suggests we could see a period of correction and consolidation,’ Joel Kruger,  a currency strategist at LMAX Digital said.

Historically, bitcoin has seen multiple pullbacks of over 20% in previous bull markets. This time, however, a big drawdown looks likely as sell-side liquidity appears to have dried up with the increased institutional participation and strong holding sentiment among investors.

“We expect short-term volatility alongside even more powerful upward trends, flirting with $20,000 before year’s end and, if the stars align, $50,000 to $80,000 by the end of 2021,” Jehan Chu, co-founder and managing partner at Hong Kong-based trading firm Kenetic Capital, told CoinDesk. Investor sentiment has never been better, Chu added.

Swissquote’s Thomas also expects a weaker dollar and political uncertainty in the U.S. to power bitcoin higher in the long run.

Bitcoin’s upward momentum has stalled since prices hit $15,971 on Nov. 6. At press time, the cryptocurrency is trading near $15,665, representing a 2.3% gain on the day, according to CoinDesk’s Bitcoin Price Index.

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