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Bitcoin Forecast – 17/12/2021

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  • Long-term sentiment: Bullish - The long-term outlook for bitcoin is strong, with leading on-chain indicators signalling growth. A supply shock is forming, driving price appreciation over the long term. The smart money continues to hold their bitcoin with the expectation of higher prices later in the cycle. With the Taproot upgrade complete, the bitcoin network has more potential for use and integration through Layer-2 solutions like the Lightning Network.
  • Mid-term sentiment: Bullish - On-chain data places us in the middle of a bull market with an expectation of bullish price action over the coming months. Short-term holders (STH) have been transacting at a loss for the past weeks, while long-term holders (LTH) continue to operate in profit. This suggests that the current selling in the market is being executed by recent speculators, who bought in near the ATH in November. In combination with the fact that distribution from LTH has been slow, this indicates that smart money expects higher prices in the future.
  • Short-term sentiment: Neutral - Derivatives markets lost ~$10bn in Futures Open Interest over the last few weeks, representing a 38% reduction since its peak in November. The drop in price triggered cascading liquidations, further accelerating downward price pressure. With considerable excessive leverage and the “weak” hands washed out of the market, a more sustainable basis for short-term price stability has been created. We expect a consolidation with sideways price action.

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