Bitcoin price seemingly hit bottom at $31,500

on Jan 26, 2021
  • Bitcoin price has been relatively calm over the past week, with its price finding itself restricted again
  • The coin has been fluctuating between two relatively close levels at $31k and $34k
  • This is likely the consequence of uncertainty caused by the shift in US leadership

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Bitcoin price hit a new all-time high at $41,999 according to CEX.IO data some two and a half weeks ago. Since then, however, the price has dropped by around $10,000, and while it has initially struggled to go back up, these efforts have, unfortunately, failed. These days, it would seem that the price has entered a period of relative stability, mostly fluctuating between two border levels.

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Fundamental analysis: Crypto uncertainty greater than ever in the US

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Bitcoin price’s new record high is still a major topic in the crypto industry, even though it has been some time since the coin reached it. In the following period, however, the price of the leading cryptocurrency has dropped somewhat, mostly because of elevated uncertainty regarding the future of crypto in the US.

The biggest drop in the coin’s price in the last week happened around January 21st, after the US finally got its new president, Joe Biden. While now-former President Donald Trump was never a fan of crypto — it is expected that Biden’s stance towards digital coins could be equally bad.

The new Treasury Secretary, Janet Yellen, said more than once that she believes that BTC is only used by criminals for illicit purposes, such as money laundering, terrorism financing, tax evasion, and alike.

But, this is likely only the initial concern in the crypto industry, and the situation will settle in due time. Many have stated that Yellen can be reasoned with, and that having her in charge is much better than having her predecessor, insisting that she only doesn’t understand crypto yet. 

It is not all bad, however, as Microstrategy CEO stated that he thinks 2021 will be a good year for Bitcoin. Given the fact that Microstrategy holds massive amounts of BTC on behalf of institutional clients, it is very likely that the company has done extensive research in order to recommend the best course of action.

For now, however, the US is waiting for Biden’s regulatory approach to BTC and the crypto sector, in general, and that really reflects on BTC price, which is basically standing still, with only minor fluctuations.

Technical analysis: Bitcoin price seemingly stabilized 

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About a week ago, BTC price was seemingly on its way back up after dropping from its ATH at nearly $42k to $31k. It managed to climb to $37,875 before it started experiencing a major drop on January 19th.

The drop lasted several days, taking the coin from the mentioned high to $28,810, according to CEX.IO. After that, it saw a strong recovery which took it up to $33,900 on January 22nd.

Ever since then, the price has been going from $31,000 to $34,000, occasionally venturing above this level, although only briefly before returning back down.

At the time of writing, Tuesday, January 26th, the coin is once again approaching its support at $31k, currently sitting at $31,432. It is likely that the next few days will bring another small recovery, before the price starts dropping towards its support once more.

What will happen to BTC later in 2021?

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I expect that the Bitcoin rally will resume in months to come. The coin has shown excellent potential and the will to grow, and its stock-to-flow model indicated that Bitcoin should keep surging as a consequence of last year’s halving, as well as increased institutional investor interest. 

The demand is growing, while the coin’s production rate is quite low, which could cause the coin to go up to $50,000 by the end of Q1 of this year. However, I expect that $50k will not be the end, as the coin could grow all the way up to $80k by the end of Q2, and the beginning of summer. As for the end of the year, I believe that BTC could close 2021 with the price of $90,000 unless some major event disrupts its trajectory.

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