Bitcoin Weekly Forecast: Let the Santa rally begin

The cryptocurrency market has been painfully slow this week. With some notable exceptions like Tezos, Chainlink, and Matic, Bitcoin (BTC) and major altcoins were oscillating in tight ranges with a bearish bias. The recovery attempted at the beginning of the week failed on approach to local resistance levels, which was interpreted by some cryptocurrency experts as evidence of bulls' weakness. 

The total capitalization of all digital assets in circulation has hardly changed in the recent seven days, while Bitcoin's market share decreased from 66.9% to 66.6% due to the strong growth of the simple of the above-mentioned altcoins. 

Several regulatory topics came up to the agenda this week

The United States and Europe are anxious to get their share of the industry until it is too late. Thus, the New York state regulator proposes a new framework for coins and tokens listings. Under the proposed regulation, the companies that once received the regulatory approval for coins issuance will be able to introduce new coins without asking for additional permissions. 

At this stage, the New York State Department of Financial Services (NYDFS) is gathering public comments about the plan based on a review of the existing virtual currency framework.

Europe is all about stablecoins. According to the new head of the European Central Bank, the Union needs to stay ahead of the curve. Speaking at her first ECB press-conference that followed the monetary policy decision, Lagarde suggested that the regulator should define the goals of the potential stablecoins project before moving forward.

"Are we trying to reduce costs? Are we trying to cut out the middleman? Are we trying have inclusive finance at no cost? There is a whole range of objectives that can be pursued."

She also noted that other global regulators, including the bank of Canada and Bank of England, are moving forward with their stablecoins projects, which means that there is a demand for such products that need to be addressed.

Russia and China are on the other side of the spectrum. A social media platform Weibo, also known as the Chinese Twitter, blocked the accounts of TRON's founder Justin Sun and Binance. This is just another evidence of the aggressive Chinese approach towards cryptocurrency-related business.

Meanwhile, in Russia, the Federal Service of Financial Monitoring (Rosfinmonitoring) said that it was dangerous to allow cryptocurrencies in a country prone to Ponzi schemes and financial frauds. The authorities pointed out that it might be relatively easy to regulate and control the new type of asset in small countries with a high level of law compliance; however, in Russia, it may lead to a storm of financial fraud.

Bitcoin (BTC) is waiting for Santa

The market is moving towards the Christmas season. This period is usually characterized by low trading activity and virtually non-existent liquidity, as many traders take days off. 

Traditionally, it is a very boring time in terms of market movements; however, traders should stay on the alert as low liquidity may easily result in unpredictable, exaggerated moves in both directions and sudden bouts of volatility.

In December 2017 and December 2018, Bitcoin demonstrated a significant recovery ahead of Christmas. This year-end growth is known as Santa's rally, and it is typical to all financial markets. According to MarketWatch, no other month has posted a higher average return than December. 

However, there is no guarantee that history will repeat. Sometimes Santa considers that traders misbehaved during the year and leave them without the long-awaited rally. 

BTC/USD, the technical picture

On the weekly chart, Bitcoin (BTC) is moving within the long-term downside trend with the trendline resistance currently at $9,100. This barrier is followed by SMA200 (Simple Moving Average) daily at $9,300, and 38.2% Fibo retracement at  $9,000. Is this area is cleared, Bitcoin will be out of the woods. A sustainable move above this resistance zone will improve the long-term technical conditions significantly and open up the way towards 2019 high at $13,862.

Notably, three doji candles after a strong decline resemble the formation created at the beginning of October. If this time, the price will follow the same pattern, we may see a strong recovery in the area of the trendline resistance in the pre-Christmas week.

While the weekly RSI (Relative Strength Index) remains flat, the daily indicator is starting to reverse to the upside, which may signal that the recovery is underway. 

On the downside, if BTC/USD moves below $7,000, the sell-off may be extended towards the support of $6,550 created by a combination of the lower line of the weekly Bollinger Band and the lowest level of the previous week. The next important barrier is seen on approach to psychological $6,000. Most likely, it will slow down the sell-off and trigger the recovery to $7,000.

BTC/USD, the weekly chart

The  Forecast Poll of experts has improved slightly since the previous week. The expectations on all timeframes show a mixed picture as the weekly chart stayed bearish, monthly forecast turned from bearish to neutral and a quarterly timeframe is now bullish. The average price on shorter timeframes stays close to $7,000, while the quarterly target exceeded 8,000, which means that analysts are more optimistic about Bitcoin's long-term fate.