Technical Charts Show Bitcoin Will ‘Top Out’ in Early 2021

Bitcoin may take a breather in the new year.

The red-hot cryptocurrency on Monday continued its longest monthly winning streak in more than a year after swooping past a new all-time high of $28,000 on Sunday.

Based on technical charts, Mark Newton, founder and president of Newton Advisors, told CNBC on Monday that the momentum may cool briefly in early 2021 but the bull market will continue.

“Bitcoin is still pretty bullish in the medium term because it just broke out to a new all-time high,” Newton said. “I think we have a ways to go. In the near term, my Cycle Composite Index shows that we peaked in early January.”

Newton said Bitcoin’s weekly chart and relative strength index reflect growing interest in the world’s largest digital currency, much of it from institutional investors.

Bitcoin searches on Google have increased by about 750% year-over-year, but remain well below highs seen since 2017, trading analysts said.

“I just don’t think there’s enough investor appetite for cryptocurrencies, and institutions are definitely moving in that direction.”

Another chart from Newton, which tracks changes in the cryptocurrency’s path using three different Bitcoin cycles, with the primary cycle being 273 days, hints at an impending change in Bitcoin’s direction.

“In those years where we had a great fourth quarter, we had a reversal in late December, early January and the price of bitcoin actually ended up being lower in the first quarter,” he said. “So I think there will be some opportunities for investors, especially funds that can buy cryptocurrencies and bitcoin.”

Newton, a long-term holder of bitcoin, ethereum, litecoin and several other digital currencies, said he hopes to “sell his position in the next week or two.”

“I think there will be opportunities to buy on dips in the first quarter of next year,” he said.

Boris Schlossberg, managing director of foreign exchange strategy at BK Asset Management, said institutional interest in Bitcoin “bodes well for the asset.”

“Can it go to $50,000? Absolutely,” he said in a CNBC interview, warning that “if you want to trade or invest in this asset, you have to have a mentality that this asset is going to have huge volatility.”