Bitcoin (BTC) price may pull back to $16,600 before continuing higher

By: Michael Harris
Michael Harris
Specialising in economics by academia, with a passion for financial trading, Michael Harris has been a regular contributor to… read more.
on Nov 23, 2020
  • A weaker Bitcoin supply might be one of the key drivers behind Bitcoin’s recent rally
  • Bitcoin price recorded the best week in seven months after closing 15.40% higher
  • BTC bulls are hoping for a correction towards $16,600 - $17,200 to buy for a potential trip to record highs

Bitcoin (BTC) price is trading around 0.4% lower today as the buyers show signs of exhaustion near the record highs. 

Fundamental analysis: Weak supply

A weaker Bitcoin supply might be one of the key drivers behind Bitcoin’s recent rally. Some analysts believe that China’s miners may be selling Bitcoins amid regulatory crackdown on local exchanges.

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“The lack of supply has fed extremely well to the trendiness of this rally, without any of the large sell-downs typical of miner activity in the past,” crypto-asset trading firm QCP Capital from Singapore said

On the other hand, some of the most prominent Bitcoin buyers and investors are hoping that the most recent rally is just a beginning. Mike Novogratz, a prominent Bitcoin investor and the CEO of a cryptocurrency investment firm Galaxy Investment Partners will rise in the future as it is seen as a store of value.

“You can’t buy bitcoin at Citibank or Bank of America, but their strategists are talking about it,” Novogratz said. “We’re seeing institutions buy into this, we’re seeing high net worth families buy into this, across the board you’re getting institutional adoption.”

According to him, the current rally is more sustainable as it is driven by institutional investors who could eventually push the price of the world’s largest digital asset to $60,000 in a year’s time. 

Novogratz adds  that Bitcoin has “hit escape velocity,” as safe-haven investors see it as a store of value. Moreover, Bitcoin is benefiting from massive stimulus plans deployed around the globe that are diminishing the value of traditional currencies. 

Technical analysis: A pullback likely

Bitcoin price recorded the best week in seven months after closing 15.40% higher. This also marks the seventh consecutive close higher on a weekly basis that has seen the world’s largest cryptocurrency nearly double its value in just over 2 months. 

Bitcoin (BTC) price daily chart (TradingView)

The buyers stopped near $19,000 as the price action now consolidated between $18,000 and $19,000. A pullback from these levels is now likely with BTC bulls hoping for a correction towards $16,600 – $17,200 to get on the long side for a potential trip to record highs. 

Summary

Some analysts believe that weaker Bitcoin supply is one of the main factors behind the recent price rally. On the other hand, a Bitcoin bull Michael Novogratz says that BTC could hit $60,000 by the end of 2021.

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