Bitcoin has hovered around all-time highs for the last two weeks after a very brief correction just shy of 20%. A longer consolidation for several weeks and months around these prices is a good sign for a larger upward move especially as institutional awareness is increasing. However we should eventually expect multiple 30% corrections on rapid moves along the way in the next crypto bull market. For those uninterested in timing the market, this is probably a good time to dollar-cost-average over the next three months to be fully invested. For those trading the market if there is no pressure to move beyond the current all-time high, we may see support around the $14k level on weakness or any sudden external macroeconomic shocks. If on the other hand there is an upside break-out to the $22k or $23k level we may see a 30% correction from there to around the $16k level before rebounding back to the $23k level and beyond. A good reference point is to target 30% off a peak as a good entry point.
Bitcoin dominance has increased from 61% to 64.8% in the past couple weeks.
A Look At 2017
If we look at a similar period of Bitcoin before the 2017 boom, we can see that a price move towards the 2013 all-time high was rejected quickly the first time in Jan. 2017 and after a 30% correction broke convincingly through the all-time high resistance to 1,300 before making another correction of 30% before April 2017. If a similar pattern holds in 2020/21 we should expect at least one 30% correction before prices remain convincingly above 19,800. In this cycle, prices have moved up toward all-time highs slightly earlier than in 2017.
Stock Markets
The SP500 has risen comfortably above all-time highs, but may test support around 3,600 before consolidating above all-time highs in a new bull market.
The Nasdaq 100 has also surpassed all-time highs in Dec. and it will be interesting to monitor how well it consolidates above it after some upward moves and possible retests of support around 12,400.
Gold Rebounds A Bit, Dollar Remains Weak
Gold has rebounded around the support level at 1,750 and is around a resistance level of 1,850 from late Sept to early Nov.
The dollar index broke through support level around 91.7 a couple weeks ago and seems to be heading towards the 2018 low support of 88.2 and might see some volatility between 88-91.
10yr Yields Lower, Credit Risk Stable
The 10yr yield shows some resistance at .98% and is currently at .9%.
Risk premiums remain low.
Money Supply Growth
M1 exploded at the end of the month and looks like a hockey stick up to 6.5T from 5.75T.
M2 money supply dipped slightly at the end of Nov. to 19T.
Conclusion
Bitcoin looks like it’s consolidating near all-time highs, but external macroeconomic shocks could temporarily bring Bitcoin prices down and may present buying opportunities. Otherwise price trends are neutral and it’s a good idea to keep accumulating either way. Institutional awareness will gradually bring more significant buying pressure. Stock markets remain strong, credit stable, dollar remains weak, gold has rebounded and money supply growth is mixed. M1 has exploded while M2 has dipped slightly.