30.12.202108:54 Forex Analysis & Reviews: Traders lock in profits, S&P 500 hits record high. BTC loses value

Bitcoin failed to consolidate above the key resistance level of $50.2K. As a result, the asset dropped and broke several important support levels. The price found support near $47.5K, where it is trying to fix. However, the analysis of the crypto market and bitcoin, in particular, shows that there are no prerequisites for a rise to local highs.

Investors lock in year-end gains

Institutional investors are the first and the main reason for the unsuccessful bullish rally in BTC. The fact is that the whole year, they have been boosting the price of the asset. It is quite possible that BTC will begin moving only when whales start buying it. Of course, buyers managed to push the price above $50K, but institutional traders remain passive. Experts at Glassnode believe that the accumulation process has not started yet and large investors are locking in profits. This is clearly seen in the buying and selling cycles of BTC. Judging by them, bears are still controlling the market. I believe that the current market situation is caused by the fact that big players are locking in profits. However, it is enough to make BTC trade within a range.

BTC and S&P 500

It seems that market participants overestimate the correlation between the S&P 500 index and bitcoin. On the contrary, BTC investors switched the S&P 500 amid a thin market. Investment flows into the index increased, which is directly related to the outflow of players from the BTC market. While bitcoin falls, the S&P 500 index grows because financial instruments have a similar audience. That is why there is divergence between the quotes of the S&P 500 and BTC/USD.

Expiration and volatility

On December 31, Bitcoin options expiration will start. It is the largest expiration with over $5.2B notional. The max pain price is $48,000. This could be a strong reason for a decline in BTC. However, rising volatility caused by approaching expiration and the New Year holidays is the main reason for a cheaper BTC. This explains why most institutional traders prefer to remain cautious.

BTC/USD in 2021

It is highly possible that bitcoin will end 2021 near $48K. The coin once again fell into a wide range of $42K-$49K. By the end of the year, it may slide to the local low around $42K. I expect a jump above $45K and a subsequent recovery to $48K. Buyers are confidently holding the $46.6K level, where the support zone and the 0.786 Fibo level are located. Therefore, a decline into this zone may occur on Thursday after the formation of an unclear candle at the end of December 29. In addition, the MACD indicator continues to move along the flat range below zero, and the RSI and stochastic are indicating an increase in buy positions, thanks to which the $46.6K level is held. On December 30, I expect the quotes to continue falling, since there is no reason for recovery.