Bitcoin’s (BTC) downtrend extended a few rungs lower on Dec. 3 after the price dropped under $54,000 and traders will note that the BTC/USD daily chart shows a notable uptick in sell volume.
Crypto Fear & Greed Index. Source: Alternative
Investors seem concerned at the emergence of a new COVID-19 variant and hawkish comments from the Federal Reserve. Meanwhile, veteran investment icon Charlie Munger added to the fire by comparing the price action in the crypto market to the dot-com era that ended with the bubble popping.
BTC/USDT 4-hour chart. Source: TradingView
Here’s a look at what analysts have to say about the current market and what to be on the lookout for as 2021 begins to wind down.
Strong lower support at $52,000 to $53,000
The “listless” nature of Bitcoin’s price action over the past few weeks was highlighted by crypto market intelligence firm Decentrader, who pointed to the choppy price action on lower timeframes and the evidence of a slow downtrend on high timeframes as cause for traders’ increased fear “that the bull run may be over.”
The analysts suggested that once BTC breaks out of its current range, “the most obvious support cluster lies around $52,000 to $53,000” near the point where the price broke down during the May crash earlier in the year.
“Should we get a deeper correction then a strong support area lies around the 200DMA at $46,200 and at the lower support level of $44,300. To the upside, a significant resistance level lies at the round number of $60,000.”
Bitcoin and Ether are “on sale” at these levels
While many have been put off by the recent price action of Bitcoin, David Lifchitz, the managing partner and chief investment officer at ExoAlpha, suggested that “Bitcoin and Ether have been bought “on-sale” when they hit $54,000 and $3,900” for those who were able to scoop them up at those levels.
According to Lifchitz, the price of Bitcoin continues to be hampered by “the Mt. Gox liquidation saga” and he suggested that BTC investors are likely to “remain cautious ahead of the distribution expected sometime in Q1 2021.”