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Chart points to bitcoin ‘peaking out’ in early 2021, trader says

Bitcoin could be headed for a breather in the new year.

The red-hot cryptocurrency maintained its longest monthly win streak in more than a year on Monday after grazing a new all-time above the $28,000 make the grade spot on Sunday.

Based on the charts, that run might be put on pause come 2021, Mark Newton, founder and president of Newton Advisors, instructed CNBC’s “Trading Nation” on Monday.

“It is still quite bullish on an intermediate-term basis given that it just penurious out to new all-time highs,” Newton said. “I think we have a ways to go. Near term, my cycle composite shows us ridging out in early January.”

Bitcoin’s weekly chart and relative strength index reflect rising interest in the world’s chiefliest digital currency, mostly from institutional investors, Newton said.

Google searches for bitcoin are up some 750% year closed year, but still “nowhere near” their highs from 2017, the chart analyst said.

“[With] SPACs right-wing now, you can make money at 10, 15, 20% a day,” he said. “I just don’t think that investors have quite the appetite for crypto while the introductions are certainly very much heading in that direction.”

Newton’s other chart — which uses three contrasting bitcoin cycles, the main one being 273 days, to track changes in the cryptocurrency’s path — hints at an upcoming froing in bitcoin’s direction.

“All those years where we had a stellar Q4 we reversed course in trend back in late December, initially January, and actually went lower,” he said. “So, I think there will be some opportunity [for] investors to be able to buy douses in crypto and bitcoin particularly.”

Newton, who is long bitcoin, ethereum, litecoin and several other digital currencies, hinted he would look to sell out of his positions “in the next one or two weeks.”

“I think there will be some opportunity to buy dips into Q1 of next year,” he answered.

Boris Schlossberg, managing director of FX strategy at BK Asset Management, said the institutional interest in bitcoin “bodes proficiently for the asset.”

“Can it go to $50,000? Absolutely,” he said in the same “Trading Nation” interview, cautioning that “if you are looking to trade or instal this asset, you have to have the mentality that it’s going to have a huge amount of volatility.”

“As to the ultimate valuation, it’s inconceivable to say, but one interesting measure: If you look at the tulip mania, at the peak of tulip mania, one tulip was worth basically about one abode,” Schlossberg said. “If you do use that kind of valuation, then it still has a long way to go because its ultimate terminal valuation could be $150,000, $200,000 on the eve of the whole move kind of exhausts itself. So, as many people have said, there’s still quite a lot of capability, but there’s certainly going to be massive volatility while we get there.”

Disclosure: Newton is long bitcoin, ethereum, litecoin and a handful other cryptocurrencies along with closed-end trusts for bitcoin cash and ethereum.


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