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Will Bitcoin (BTC) See A Christmas Rally? Here’s What To Watch

After the recent speech by US Federal Reserve chairman Jerome Powell, there was a price firework on the stock market, from which Bitcoin also benefited. As a result, the BTC price has climbed to over $17,000.

At press time, Bitcoin was trading at $16,982. However, the joy could not last long. The price is currently just bobbing along at the level reached. In the meantime, there are even signs of a slight downward trend again.

In the 1-hour chart, investors should keep an eye on four levels. A fall below $16,727 could mean an erosion of the recent Powell gains. On the other side, a rise above the $17,250 level would clear the path towards the $17,800-$18,000 area.

Bitcoin BTC USD 2022-12-02

Bitcoin price, 4-hour-chart. Source. TradingView

Did The Market Misinterpret Powell?

The reaction of the Bitcoin market is actually also logical. Since the last meeting, Fed officials have repeatedly defended the restrictive monetary policy and demanded its continuation.

That Powell now said that “the time for moderating the pace of rate increases may come as soon as the December meeting” was a surprise. Still, the market overheard the hawkish comments.

Thus, Powell also said that the fight against inflation is far from over. Therefore, he said, the Fed must keep its policy at restrictive levels “for some time.”

Powell also was tired of emphasizing that the Fed still has a long way to go to bring inflation down and that they probably need “somewhat higher” interest rates than expected in the September projections.

Gold bug Peter Schiff commented:

Investors are no longer buying what Powell is selling. Today he was as hawkish as ever, but the dollar tanked, and gold & stocks rallied. Powell’s resolve to fight #inflation is contingent on a soft landing. Not only will the economy crash, it’ll be another financial crisis.

Bitcoin Faces Headwinds In December

Whether there will be a Christmas rally in December is likely to depend on various factors that will confront Bitcoin with serious headwinds.

First and foremost, the Fed meeting on December 14 and the release of the new CPI data a day earlier are likely to be key in determining whether there will be a green or red Christmas.

In addition, Bitcoin investors should keep an eye on further FTX contagion effects, especially Genesis Trading and DCG. If DCG indeed only has a liquidity issue and can solve it, it would be a major relief for the crypto market.

Also, recession fears are growing, but could take a back seat for the time being if inflation continues to fall and the Fed announces a 50 bps rate hike. Potentially, this would be solid fuel for a strong year-end rally.

With miner capitulation currently looming, Bitcoin could be entering the closing stages of its bear market. The historical average duration is 14 months. Currently, we are in the 13th month.

A Glimpse Beyond December – Bitcoin’s First Recession?

Not only Peter Schiff, but also other analysts are still warning of an looming recession, even though Powell still called a soft landing “very plausible” during his last speech.

The fact that the full impact of the Fed’s policy will not become apparent until 2023 is also supported by the fact that Q4 earnings results, which are due at the end of January, are always the strongest of the year.

Thus, a recession might not become apparent until April 2023, when Q1 2023 earnings are announced.

A CryptoQuant verified analyst noted that the 2YR-10YR yield curve has the steepest inversion since the 2000s (dot com bubble). Over the past 2 cycles, second inversions caused a correction of about 50% in the S&P 500.

“The theoretical bottom of a similar correction would be the Covid low for SPX – 34% downside from here,” the said and continued:

If this happens, it would be Bitcoin ‘s first true recession. Surviving it would forever solidify BTC as an investable macro asset. […] it also means BTC prices may stay depressed for longer than the typical 3-month cycle bottoms.

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Christmas Gift 2021: $50K BTC After PlanB $100k Miss

Following an epic fail from pseudonymous analyst, PlanB, Bitcoin was trading at $50,000 on December 25th, avoiding an unwelcome Christmas Day surprise for BTC bulls.

PlanB Model Fails Bitcoin

PlanB’s model failed many crypto investors who must be looking at their portfolios with disappointment, as the pseudonymous analyst’s $100,000 Bitcoin prediction did not come true on December 25.

BTC/USD maintained $50,000 support into the weekend, according to TradingView data, after ranging following local highs above $51,500.

As the Christmas season began, the pair remained placid, with thinner liquidity yet to manifest itself in the form of violent price movements.

With most traders and analysts taking a break from trading and analysis, the $1 trillion market cap valuation level at $53,000 remained the closest upside objective.

BTC trading at $50k. Souce: TradingView

PlanB made a point of separating his floor model from the Bitcoin stock-to-flow model. The floor model failed in November and December, according to the analyst, as it did not reach the minimum expected costs of $98,000 and $135,000, respectively.

PlanB had previously stated that if Bitcoin did not reach $100k in December, his stock-to-flow model would be invalidated, but he now appears to be changing his mind. Instead, PlanB stated in a recent tweet,

Let me be clear:1) Nov98K & Dec135K miss = FLOOR MODEL FAIL2) Dec100K miss: I have said earlier that if BTC<$100K Dec2021, then S2F is “off the rails” “invalidated” “dead”. Tbh that was an ill attempt to clarify “$100K average this cycle” & regression analysis. S2F MODEL INTACT pic.twitter.com/LRdfLinTm4

— PlanB (@100trillionUSD) December 24, 2021

PlanB, reportedly stated this summer that if the Bitcoin price did not reach $100,000 in December, he would consider S2F useless.

Related article | Plan B: The Next 6 Months Will Make Or Break Famed Bitcoin Model

Is Next Year PlanB’s Plan B

Following criticism over Twitter statements he claims were misinterpreted, PlanB noted that Bitcoin would continue to follow his model’s projections.

Investors and experts are split. While many investors are debating if the floor model failure marks the end of S2F, Willy Woo, a Bitcoin on-chain analyst, has a different perspective. PlanB’s opinion did not define S2F, according to Woo, because models existed independently of their designers. He wrote on Twitter,

“A model is a model. We can look back on it years from now and know whether it gets invalidated. Certainly not from some arbitrary line in the sand, even if it’s from the creator.”

While a prediction from the recently invalidated floor model of $135,000 this month proved to be unduly optimistic, that figure as an average price for this half cycle remains in play. PlanB has previously stated that models do not have to be perfect in order to work.

Related Reading | Why This U.S. Congressman Compared Bitcoin Investment With Playing The Lottery

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A Crypto Christmas Miracle? Bitcoin Signal Suggests A Bottom Is Near

During no other time of the year are humans more open to the idea of miracles than now. But what about a crypto Christmas miracle for Bitcoin?

Rather than the miracle being the premise for a holiday flick, it is possible that the appearance of a backtestable technical signal puts in a miracle-esque bottom for the cryptocurrency market.

More Credence For A Santa Claus Rally In Crypto

Dozens of Hallmark-style holiday movies include the world “miracle” in their title. The idea that Santa Claus could hit the homes of children across the entire globe in one night demonstrates the type of hopeful sentiment that can build this time of year.

Related Reading | Could Bitcoin Benefit From A Santa Claus Rally?

Across the cryptocurrency market, investors got the equivalent of coal for Christmas – that is unless a miracle happens. That miracle has a higher than average probability of happening this holiday, according to the Fisher Transform technical indicator on BTCUSD 3-day timeframes.

This technical indicator has only shown such an extreme deviation two other times throughout its history – and when you read at what prices this signal triggered at previously, you won’t help but become more hopeful for a Santa Claus rally over the next several days.

Could a Christmas miracle make investors merry? | Source: BTCUSD on TradingView.com
The Most Extreme Bitcoin Bottom Signal Is Back For Christmas

The Fisher Transform is a technical indicator that was created by John F. Ehlers and, according to Investopedia, “converts prices into a Gaussian normal distribution.” Doing so makes spotting turning points a lot easier. Both extreme readings in standard deviation and the signal itself changing direction present a higher than normal probability point of reversal.

When it comes to objective technical analysis, few technical indicators supply such regularly backtestable results as the Fisher Transform. The version of the Fisher Transform pictured above and below is a custom tool designed by Moe_mentum dubbed the iFish Smooth & Divergence, available on a two-week trial basis or $525 for lifetime use.

Could this signal be another gift for Bitcoin holders? | Source: BTCUSD on TradingView.com

On 3-day BTCUSD charts, the Fisher Transform is showing a potential reversal through turning around at the -2.0 deviation – a point of extremes reached only two other times prior.

The first of the two instances was in October 2011 when Bitcoin was trading at around two bucks per coin. The second was at the bear market bottom in December 2018. Now, some three years later, the extreme level has been reached again, just as the indicator starts turning around.

Related Reading | Bitcoin Falls Flat: Examining A Rare Bull Market Corrective Pattern

The Fisher Transform is an unbounded indicator, meaning that it could very well reverse again and continue to a deeper deviation and extreme. However, doing so would only further increase the likelihood of a reversal further. This makes the Fisher Transform a helpful tool for those who trade using a “mean reversion strategy” and attempt to profit from when prices move to unusual extremes.

Bitcoin price could still make another low while the Fisher Transform fails to do so. At that point, a bullish divergence would be possible and another buy signal potentially generated – again improving the chances of a positive outcome.

Investopedia warns that the potentially lagging indicator could have several limitations. For example, “asset prices are not normally distributed, therefore attempts to normalize prices could be inherently flawed and may not produce reliable signals.”

However, the Fisher Transform remains among the most statistically reliable though backtesting of data, especially when combined with other tools for confirmation. And these statistics show a Christmas crypto miracle could be on the way.

#Bitcoin per D3 — IFS reading one of the historical lows at ( OS) region backtest shows that market was bottomed

D3 at( -2 deviation ) was 👇-> October 2011 @ $2.15 -> 15 Dec 2018 @ $3135https://t.co/125TAgbVlu

— Moe (@Moe_mentum_) December 23, 2021

Follow @TonySpilotroBTC on Twitter or join the TonyTradesBTC Telegram for exclusive daily market insights and technical analysis education. Please note: Content is educational and should not be considered investment advice.

Featured image from iStockPhoto, Charts from TradingView.com

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Could Bitcoin Benefit From A Santa Claus Rally?

CNBC personality Jim Cramer has been pushing the possibility of a so-called “Santa Claus rally” across the stock market. But could this holiday-related trend have an impact on Bitcoin and cryptocurrencies?

Mad Money Host Calls For “Santa Claus Rally”

Bitcoin has taken a beating, down substantially from what most of its backers believed the year would be closing at. The stock-to-flow model was predicting anywhere between $100,000 to $288,000 per coin, but instead the top cryptocurrency by market cap is below $50,000 or around half of the lower of the two targets.

Related Reading | Could An Elon Musk Time Magazine Cover Predict The Crypto Cycle Peak?

But the year isn’t yet over, and a potential Santa Claus rally narrative is slowly spreading across the world of stocks. CNBC Mad Money host Jim Cramer is giving the idea heavy press. First, he tweeted explaining that today is the day it would normally start.

Historically today is the day the Santa Claus rally starts. It worked even during 2007-2009. So it is hard to doubt..

— Jim Cramer (@jimcramer) December 21, 2021

On Squawk Box, Cramer later revealed that if “you bought today and you just held on even for six days, you made money almost every single year.”

According to Investopedia, a Santa Claus rally “describes a sustained increase in the stock market that occurs in the last week of December through the first two trading days in January.”

Statistics show that there is a remarkably higher probability of strong performance during these key dates based on the S&P 500. Such rallies are retail driven, and occur for various reasons which include:

  • Increased investor enthusiasm around the holidays
  • A low volume environment due to holidays and vacations
  • More sophisticated short-sellers are on vacation
  • The end of tax-loss harvesting by institutional or wealthy investors

But does such a phenomenon work for Bitcoin and crypto?

Ho ho how much could crypto climb? | Source: BTCUSD on TradingView.com
Will Bitcoin Climb This Christmas Into The New Year?

Reviewing past statistics related to Bitcoin price action around the last week of December into the first two trading days of January, data shows there is a lower probability of a Santa Claus rally in crypto than in stocks.

Only four years during such timeframe have been positive for Bitcoin, with the most recent occurring last year. With far less data available than in the S&P 500, anything is still possible when it comes to speculative digital assets.

Related Reading | Bitcoin Falls Flat: Examining A Rare Bull Market Corrective Pattern

Other seasonal type data related to this very day might prove to be more profitable. Today also is the Winter solstice, which in the past has been in close proximity to either a top, bottom, or a break of all-time high.

The Winter Solstice and Fibonacci | Source: BTCUSD on TradingView.com

With this Winter solstice having failed to produce the peak of a rally, it could – like it has in the past – instead put in a short-term bottom that runs until the next equinox. And its possible that it starts with a Santa Claus rally.

Crypto is notoriously low volume compared to other markets, especially during holidays. The presence of institutional tax loss harvesting and more advanced short hedge positions could have kept Bitcoin price down during the December month, but with that out of the way, retail could push prices up in the near term.

However, according to the person who first mentioned a Santa Claus rally in The Stock Trader’s Almanac in 1972, Yale Hirsch, the rally itself isn’t what’s important. It is what arrives in the year that follows that matters.

“What’s important is not to catch this little rally but to use it as indication for what may happen in the coming year,” he said, calling it “an early indicator for the year to come.”

Hirsch’s father even came up with a phrase to help remember: “If Santa clause should fail to call, bears may come to Broad and Wall.”

I'm dreaming, of a green Christmas. With every #Christmas chart I draw. When #Bitcoin tops are possible; altcoin season, probable. Flip bear, then short it once again. pic.twitter.com/1wV6JYy4Vx

— Tony "The Bull" Spilotro (@tonyspilotroBTC) December 15, 2021

Follow @TonySpilotroBTC on Twitter or join the TonyTradesBTC Telegram for exclusive daily market insights and technical analysis education. Please note: Content is educational and should not be considered investment advice.

Featured image from iStockPhoto, Charts from TradingView.com

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Here’s What Cardano Founder Charles Hoskinson Wants For Christmas

Christmas is just around the corner and Cardano founder Charles Hoskinson is already in the Christmas spirit. The founder went live on YouTube on Monday to do another surprise AMA where he answered questions from the community. As usual, Hoskinson responded to a number of questions from community members who asked about the Cardano project.

What Cardano Founder Wants For Christmas

During the AMA, Hoskinson gave a rundown of what he would like for Christmas and it was not your usual itemized list of stuff people want for Christmas. Instead, Hoskinson decided to address a pressing issue in the crypto space and that is the divide that is very much present among investors of different projects.

Related Reading | Cardano Records Over 20 Million Transactions Ahead of DEX Launches

Cardano has been one of the harder hit projects when it has come to FUDs in recent times. The project had been subjected to what can be described as hateful comments all-around social media especially since its token ADA began its two-month-long decline. To this end, Hoskinson wants everyone in the crypto industry to start getting along.

“The one thing I want for Christmas is for everyone to start getting along in our industry. It’s extraordinary to me that when people are so close in philosophy and viewpoint, and in some cases technology, they can be so far apart as people. It’s extraordinary,” the founder said.

ADA trending low at $1.4 | Source: ADAUSD on TradingView.com
Pushing For Better Systems Going Forward

Hoskinson also addressed the systems that have kept investors against each other for years. He said that the crypto space is where this is more prominent as other industries do not see as much hate between each other as the crypto industry.

Related Reading | Number Of Cardano Wallets Staking ADA Crosses 1 Million

“You don’t see this in other industries,” Hoskinson said. “You don’t see in physics or biology, or cellphone manufacturing, or whatever, pick an industry, the amount of tribalism, hate, and vitriol that our industry has for each other.”

The founder went on to explain that as long as people keep hating each other, there will be no way to fight the real enemy, which he identified as the legacy systems. He said this system has held down three billion people and will continue to do so. The founder also acknowledged that this will not be easy as there will always be those who try to divide others in the space.

Hoskinson explains that there will be books and podcasters saying things to divide people. Even on social media, where the majority of the vitriol will be spilled. However, it is up to everyone in the industry to take a stand and put a stop to the hate.

“That has to stop and the only way it’s going to stop is if we get better systems that are more fair. And the only way we do that, is we have to work together. So, we’ll see, 2022, whether that’s accomplished.”

Featured image from Yahoo Money, chart from TradingView.com