Bitcoin rallied last week, breaking out above the ~40K level and rallying higher, nearly grazing the $50K level before closing the weekly candle slightly lower just under $49K. This is a classic bullish engulfing candle and a tremendously bullish breakout, pointing Bitcoin to higher prices on all timeframes, the most immediate being $50K and then $55K which would mark a $1 trillion Bitcoin market cap for the first time in its history. Reminder, Monday is a US holiday so markets will be thin!
(February 14, 2021 7:30PM EST)
Outlook:
Bitcoin continued its recovery last week, recapturing the $40K level and bursting above it on Tesla's announcement that they have purchased $1.5 billion in Bitcoin with company reserves and will accept Bitcoin as payment for Tesla vehicles. Once BTC broke $42K it was off the races, quickly rushing up to $45K and then nearly $50K before finding a bit of resistance late in the week but still finishing near the highs of an extremely bullish week; perhaps Bitcoin's most bullish week in all of 2020-2021 so far!
From here, we're looking for a $50K Bitcoin tag for the first time, then $55K which will officially mark a $1 trillion Bitcoin market cap, giving the asset and crypto space at large a huge sign of validation, and then every $10,000 until $100K. As you can see in the longer-term chart below, my crude Elliott Wave count for Bitcoin on the weekly chart shows a possible $94,000 Wave 3 target for Bitcoin as early as late 2021. By that measure, based on the price action, as shown above, we are well within the projection and en route to this projection, which should take some time to play out but may only accelerate as Bitcoin's market cap grows, thus enabling conservative institutions on the sidelines enough reason to finally submit a buy order.
The Tesla news helped propelled Bitcoin to higher highs, however, this is simply another domino to fall in a long line of dominos as more traditional companies and institutions flip the script and look to take sizable initial positions in Bitcoin. While this is helpful, it only adds fuel to an already burgeoning fire fueled by programmatic and decreasing monetary supply, increasing demand, rampant fiat inflation, and a huge amount of Bitcoin remaining or being added to cold storage. Also last week we saw the following news:
A Canadian Bitcoin ETF was approved
Uber says it won't buy Bitcoin but it's open to accepting it as payment
Jack Dorsey and Jay Z announce a 500 Bitcoin fund for development in Africa and India
BNY Melon and Venmo make moves or announcements of moves to come in Bitcoin
Morgan Stanley aims to make a $150 billion investment
Traditional Market Effects
In traditional markets, gold drifted lower recently as the US dollar was flat, interestingly showing another perhaps brief decoupling of the two assets from Bitcoin which has been unparalleled in its bullishness as of late. Typically, Bitcoin maintains a close negative covariance with the DXY, so we'll see if any price action this week corresponds with Bitcoin or gold for that matter.
Support:
Look for support around the $40K - $42K level, previous resistance-turned-support. Below that, $35K and then $30K as a floor.
Resistance:
Immediate resistance at $50K, then $55K, $60K, etc. I imagine $50K - $55K would be strong resistance, although the bigger Bitcoin gets the more legitimacy it gains = more institutional investors can justify taking initial positions, which would only add to the disproportionate demand vs supply.
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