Chart points to bitcoin ‘peaking out’ in early 2021, trader says
Bitcoin could be headed for a breather in the new year.
The red-hot cryptocurrency continued its longest monthly win streak in more than a year on Monday after grazing a new all-time above the $28,000 mark on Sunday.
Based on the charts, that run might be put on pause come 2021, Mark Newton, founder and president of Newton Advisors, told CNBC’s “Trading Nation” on Monday.
“It is still quite bullish on an intermediate-term basis given that it just broke out to new all-time highs,” Newton said. “I think we have a ways to go. Near term, my cycle composite shows us peaking out in early January.”
Bitcoin’s weekly chart and relative strength index reflect rising interest in the world’s largest digital currency, mostly from institutional investors, Newton said.
Google searches for bitcoin are up some 750% year over year, but still “nowhere near” their highs from 2017, the chart analyst said.
″[With] SPACs right now, you can make money at 10, 15, 20% a day,” he said. “I just don’t think that investors have quite the appetite for crypto while the institutions are certainly very much heading in that direction.”
Newton’s other chart — which uses three different bitcoin cycles, the main one being 273 days, to track changes in the cryptocurrency’s path — hints at an upcoming turn in bitcoin’s direction.
“All those years where we had a stellar Q4 we reversed course in trend back in late December, early January, and actually went lower,” he said. “So, I think there will be some opportunity [for] investors to be able to buy dips in crypto and bitcoin particularly.”
Newton, who is long bitcoin, ethereum, litecoin and several other digital currencies, said he would look to sell out of his positions “in the next one or two weeks.”
“I think there will be some opportunity to buy dips into Q1 of next year,” he said.
Boris Schlossberg, managing director of FX strategy at BK Asset Management, said the institutional interest in bitcoin “bodes well for the asset.”
Reference: CNBC
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