As Bitcoin’s Roller Coaster Ride Continues, Here’s What to Watch Out For

January 12, 2021

After dropping nearly 28% over the weekend, Bitcoin saw a recovery close to 20% overnight as the current price sits at $43,400 Canadian. Bullish and bearish catalysts are currently duking it out to see whether the price goes up beyond the $52,000 high we saw just in the last couple of days and a potential $37,000 low. This all means investors could see quite the battle over the coming weeks.

The Bullish Catalysts That Allowed Bitcoin to Rebound Last Night

High levels of trading volume is normally a bullish indicator, especially once there has already been a significant dip. That’s exactly what the market saw last night. More than $22 USD billion in volume was moved in order to push the price back up. Bitcoin is still nowhere near $52,000 high we saw just days ago, but it is clearly battling to stay between $40,000 and the all-time high right now.

A fundamental reason for the $22 billion volume being traded right now is that major banks are expected to announce significant quarterly losses for the fourth quarter of 2020, according to Reuters. This will temporarily paint Bitcoin in a more positive light. That said, bearish catalysts are right around the corner and they may lead cryptocurrencies to lower lows.

Bearish Catalysts That May Lead to Another Significant Dip in the Market

Much is being made about the fact that printing trillions of dollars in stimulus money to save the economy and protect people all around the world from the fallout of the coronavirus pandemic is going to lead to the inflation of money. It’s a strong and prevailing narrative for the long term. But in the short term, the U.S. dollar is about to gain strength, which should send the price of Bitcoin lower.

The U.S Dollar Index (DXY) measures the strength of the dollar and right now technical indicators are showing that the American dollar is in oversold territory. This means investors are going to buy the dip over the next little while. Once that happens, the price of Bitcoin is likely to fall.

What’s also correlated is the amount of stablecoins investors are holding because stablecoins represent capital that is sitting on the sidelines. At the moment, the inflow of stablecoins entering the market is low, meaning many people are heading for the sidelines and prices will dip.

Keep in mind that there is also considerable unrest going on in the United States as Donald Trump supporters prepare to protest election results all across the United States on Inauguration Day and tensions are likely to rise quickly, which might send all markets lower.

What to Do to Capitalize Off of All of These Catalysts

The best strategy for making money investing with cryptocurrencies is to maintain a long-term outlook. The factors listed above could change in the next week or two and there is no real way to time the market unless you are a technical analysis expert.

Whatever you decide your immediate strategy is, you can purchase Bitcoin, Ethereum and multiple stablecoins right here at Netcoins and have your liquidity ready to enter and exit the market at your convenience. Register for a free account today and get started.

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