Bitcoin’s record rally could hit a wall in 2021.
Signs in the cryptocurrency’s technical chart point to a 25%-30% sell-off that’s likely to hit early in the new year, Miller Tabak chief market strategist Matt Maley told CNBC’s “Trading Nation” on Thursday.
Bitcoin broke above the $23,000 level for the first time on Thursday, building on a massive, 215% year-to-date rally.
“There’s no question it’s been a melt-up, and it could last a little bit longer,” Maley said. “I think on a short-term basis it could continue a little bit longer, and I’m very bullish on it on a very long-term basis. But intermediate term, I’m a lot more concerned than I think a lot of other people.”
Part of the problem is the market’s excess liquidity, Maley said. Over the summer, that sideline money fueled the mega-cap tech rally; now that those stocks have stabilized, it’s driving bitcoin, he said.
“The problem is it’s now taken the weekly [relative strength] chart on bitcoin to a very, very high level,” he said.
“It’s above 88 [as of Thursday]. That’s not quite up to the 90 level that it reached twice in 2017, but those were followed by declines of 36% and 64%,” he said. “We’re not quite there yet, … but as the pandemic starts to fade a little bit [and] maybe that liquidity becomes a little less plentiful, this stock could get clobbered like it has many other times in the past.”
He noted that just