Bitcoin Price Primed to Test $20k Ahead of CME Launch
The price of bitcoin is edging up, but how it will respond to Sunday's launch of futures on the CME exchange is anyone's guess.
The upside move in bitcoin has gathered traction this weekend as investors brace up for BTC futures launch by the CME.
As per CoinDesk's Bitcoin Price Index (BPI), the world's largest cryptocurrency by market capitalization rose to a new all-time high of $19,783.06 at 12:14 UTC today. Bitcoin (BTC) has appreciated by 10 percent in the last 24 hours as per the data source CoinMarketCap. A year ago, it traded below $1,000.
The move towards $20,000 is in line with the bull flag breakout discussed last week. Prices moved above $16,000 in a convincing manner after the CBOE launched the first BTC futures contract at 23:00 GMT last Sunday. The CME is set to launch its own version today.
A major part of the rally from $6,000 (Nov. lows) could be attributed to speculation that a move to the mainstream via BTC futures listing on the CME and CBOE would open doors to yield-hungry institutional money.
So, the cryptocurrency might come under pressure this week due to "sell the news" trading following the futures listing on the CME. Also, the prices chart analysis says there is merit in being cautiously bullish on the cryptocurrency.
Bitcoin 4-hour chart
The above chart (prices as per Coinbase) shows:
- Bull flag breakout on Dec. 10 and a bullish follow-through
- Rounding bottom pattern along the rising trend line and a bullish break above $18,000
Clearly, the bulls are in control and could take prices well above the $20,000 mark. Comments on social media show a significant portion of the investor community is expecting the cryptocurrency to test $24,000 in the short-run.
- The technical studies, except the overbought conditions as shown by the relative strength index, favor further upside in bitcoin.
- Still, a risk of "sell the news" trading cannot be ruled out. In such a case, prices could test the upward sloping 4-hour 50-MA and 100-MA of $17,000 and $14,850, respectively.
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