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04.12.2023 06:33 PM
Bitcoin Skyrockets Above $41k: What's in Store for the Cryptocurrency in the Trading Week Ahead

Over the past two weeks, the Bitcoin market has shown dozens of clear and indirect signs of buyer exhaustion. The likelihood of a correction has significantly increased as the cryptocurrency transitioned from movement within an ascending channel to consolidation within the range of $36.6k-$38k. Simultaneously, volumes of profit-taking in BTC have been on the rise, adding further pressure to the price.

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However, ultimately, buyers proved to be more persistent and much stronger than sellers, leading to the breakthrough of the $38.3k-$38.5k level. Subsequently, Bitcoin continued its upward movement and reached the $40k level. The new trading week began with another upward impulse, sponsored by Asian markets. As a result, BTC reached the $41.5k mark, and there are all reasons to believe that the upward movement will continue.

Jerome Powell's Speech

Financial markets virtually had no reaction to the revised GDP data for the third quarter in the United States, and therefore, attention was focused on the speech by the head of the Federal Reserve, Jerome Powell. Overall, it can be said that the official's speech had a powerful positive effect on financial markets, including the cryptocurrency market, so the significant price rise to $41.5k in these days appears justified.

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Last Friday, the head of the agency announced that despite significant achievements in combating inflation, there is a possibility of another key rate hike. Powell immediately noted that the situation had become precarious, and the Federal Reserve is trying to balance on the edge, making decisions based on the aggregate of incoming data to avoid triggering a recession. The head of the agency also emphasized that the regulator's policy is in a restrictive mode due to potential consequences for the U.S. economy.

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Despite the official's attempts to maintain a neutral tone, the latest statement was perceived by investors as a positive signal that the rate would only be raised in the most critical case. As a result, major financial assets such as precious metals, cryptocurrencies, and the stock market resumed their growth. CME FedWatch indicates that 97% of traders are confident that the rates will remain unchanged after the upcoming meeting.

Will Bitcoin Continue its Rally?

As of December 4th, Bitcoin has exceeded all expectations, solidifying its position above $41k. One of the scenarios we considered was the final formation of the "ascending triangle" pattern and the movement of BTC's price to the $41.6k-$42k range. The cryptocurrency has almost fully exhausted the upward potential of this pattern.

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At the same time, technical metrics present mixed signals: the MACD confirms the resumption of the upward movement and indicates an increase in bullish volumes. However, the Stochastic has entered the overbought zone and is moving flat, which may lead to a breakthrough of this level in the near future, consequently serving as a sell signal. Taking this into account, there are no clear technical signs of exhaustion in the upward potential.

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The active accumulation phase continues, and according to Glassnode data, the number of Bitcoin addresses with a balance of less than 0.01 BTC has reached a record high of 37.5 million. Analysts have noted a significant outflow of funds from crypto exchanges amounting to 37,000 BTC. In other words, fundamentally, Bitcoin remains highly sought after, the quantity of coins on exchanges is decreasing, and attempts to push the price down are quickly met with buying interest.

Summary

Bitcoin has been continuously growing for over four weeks, and with each new trading day, the probability and necessity of a correction increase. However, market frenzy and "greed" prevent BTC/USD from undergoing a proper correction. Additionally, technical indicators do not provide a clear answer regarding the approaching local trend reversal. Considering this, along with the potential positive impact of fundamental news, it can be expected that Bitcoin will continue its rise this week, reaching $42k with potential movement towards $45k.

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