Bitcoin Weekly Forecast: BTC makes new yearly highs while its network activity looks worrisome

Bitcoin has lived through the best week since February 2018. The pioneer digital currency price gained over $2,000 in less than seven days. The bullish momentum allowed it to reach a new multi-year high of nearly $18,800, marking November 2020 one of the strongest bullish months ever. 

The fundamentals remain positive

From a fundamental point of view, Bitcoin was influenced by the same old stories like institutional investments, inflation hedge, and a store of value in the view of the imminent fiat collapse. Also, now that the US presidential elections are behind, the level of market uncertainties decreased, making Bitcoin and other risky assets more attractive again. 

Meanwhile, sustainable price growth resulted in increased bullish forecasts from reputable investors and large banks. For instance, a senior executive at US-based financial giant Citibank, Tom Fitzpatrick, mentioned that Bitcoin's price could surpass $318,000 because it will become a digital version of gold.  

While the forecast might seem a bit far-fetched as it implies more than a 1,500% price increase for BTC, some on-chain metrics support this thesis. Moreover, the fact that traditional finance experts now share positive views can be regarded as a strong bullish signal itself.

The regulatory climate is also softening. Even US authorities are more friendly towards digital assets. The Securities and Exchange Commission's (SEC) outgoing chairman, Jay Clayton, recently admitted that Bitcoin works as a store of value and a payment mechanism. Basically, he endorsed the flagship cryptocurrency as a new form of money and confirmed that it was not a security.

Notably, the SEC has been hunting various blockchain startups that might have sold unregistered securities disguised as an initial coin offering (ICO). The regulator took action against several projects, ordering them to return the collected funds to ICO investors and pay hefty fines. This regulatory scrutiny even encouraged San-Francisco-based Ripple to ponder over moving its headquarters to a more friendly jurisdiction.

Everything that goes up must come down

Bitcoin's long-term technical indicators and on-chain metrics paint a bit less rosy picture. The bellwether cryptocurrency is grossly overbought and vulnerable to a steep correction. The TD Sequential indicator has been sending warnings to the market since the middle of the week, while the intraday charts imply that Bitcoin price has reached a local top for now.

Indeed, the TD setup presented green nine candlesticks on the 12-hour and daily chart, which are considered sell signals. If these bearish formations are confirmed, Bitcoin price may be forced to retrace for one to four daily candlesticks aiming for $16,500 as the primary target.

Bitcoin's TD Sequential Indicator on Multiple Timeframes

The weekly and monthly charts are on green eight candlesticks, which is a precursor of a sell signal, produced by a green nine candlestick. A spike in selling pressure around the current levels could see Bitcoin price retreat to $12,500 before a new bullish wave starts.

As previously discussed, Bitcoin is prone to 30-40% corrections on the way to new highs. Thus, a pullback following seven weeks of upside momentum can be seen as healthy. It will allow sidelined investors to re-enter the market and a new influx of capital may propel BTC to new all-time highs.

Bitcoin Forecast Poll

Regardless, FXStreet's Bitcoin Forecast Poll shows an improvement from the previous week as the expectations on all timeframes turned bullish. Notably, the price predictions imply that the participants bet on Bitcoin's growth above $17,000 on a monthly basis with the following correction towards $16,000.