Bitcoin’s (BTC) Christmas Rally Was Short-Lived. What’s Next?

Bitcoin's (BTC) Christmas Rally Was Short-Lived. What's Next?

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On the eve of Christmas, stock indices nevertheless moved up. The cryptocurrency market supported the rally.

Bitcoin rallied 6% overnight and broke up through the important $50K resistance level for the first time since December 13. However, according to the stock exchanges, the trading volumes were small. Altcoins followed bitcoin and have risen too. Some of them have grown at record rates earlier, such as Terra (LUNA) and Polygon (MATIC). They grew by 50% and 15% respectively over the week.

The Santa Rally was short-lived. BTC rolled back from $51.5K to below $50K, which is now a support level. Technical analysts clarify that the support level is $49.7. Indeed, BTC corrected on Sunday and even cost $49,623 at the moment, according to Coinmarketcap.

Crypto funds expect the rally to continue to $60K in the short term. But tech analyst and crypto veteran Tone Vays envisions turbulence. “BTC will face its ultimate test sometime in late December or early January.” – the expert said. He predicts a rebound to the area of ​​the “death cross” in case if bitcoin does not hold above $50K and returns to the price of $48K. Ton Weiss believes that it is from this price that a rebound to the “cross of death” is possible.

The Cross of Death is the intersection of long-term and short-term moving averages. If the short-term moving average falls below the long-term one, then it is considered a strong bearish signal. The Cross of Death for BTC is currently between $52K and $54K. If bitcoin really bounces into this area, then we can expect it to fall to 30% of ATH, that is, again to $48K, and then even lower, to $45K and $42K.
However, cryptocurrency funds started their New Year’s play and invested in options. According to the derivatives exchange Deribit, the options to buy are in the $52K – $56K range with expiration on Jan 14.

The optimistic sentiment also supported the TOP-10 of the rest of the cryptocurrencies, which were in green during Christmas, with the exception of XRP. But the Ripple cryptocurrency previously showed positive dynamics and grew by 20% from $0.83 to more than $1.0. As for bitcoin, optimists see its price as around $60K. BTC is unlikely to gain a foothold above this level because there will be low activity on the market during the New Year holidays.

The continued bullish trend is confirmed by small stocks of BTC on exchanges and a steady demand for bitcoin from institutionals. A fall in the cryptocurrency market after the New Year is possible if in the first days of 2022 regulators make tough statements on cryptocurrencies.