Bitcoin at new all-time high to close out 2020

(30 December 2020)  As the world says goodbye and good riddance to 2020, all is not well in financial markets.  To be sure, many stock markets are near all-time highs as the Fed's QE liquidity injections have succeeded in their goal to boost the value of risk assets.  This asset inflation has come at the expense of the US dollar as the greenback has fallen to its lowest level in almost three years.  More worryingly, bitcoin has made new all-time highs in recent days.

As a reaction to the unprecedented levels of debt and government intervention, Bitcoin has hit record highs this year and traded above $28,000 today.  On the face of it, the new highs in bitcoin are a simple reflection of the weakness of the US dollar as the Fed and the US government have borrowed and printed in an effort to prop up the economy during the pandemic.  The surge in the supply of dollars is the main reason for the decline in its value relative to most other assets, including bitcoin.  

But the rise in bitcoin may have reached a dangerous level as the chart shows a seemingly parabolic rise in price. While this exponential growth makes for exciting headlines and draws in all kinds of speculators to the casino, it is probably unsustainable in the long run.  Parabolic rallies typically end in tears, although the exact timing of the decline is often hard to predict.  Let's see if the planets offer any clues when this rally may end, or at least, take a breather.

While there are several factors that may explain the current rally, the transits are the best place to start.  We can see that bullish Jupiter (8 Capricorn) is conjunct Mercury this week, after having recently conjoined its own natal position in mid-December.  While this is a clearly positive influence, once Jupiter passes Mercury in a few days, the bullish influence will begin to wane.

The bigger concern is that Saturn (7 Capricorn) is following close behind and is due to conjoin Mercury late next week. This is a more bearish influence and suggests that the price of bitcoin is more likely to fall.  The 60-degree alignment of Jupiter with the Moon (10 Pisces) could offer some support to prices but given the simultaneous Saturn influence, it could produce a choppy, uncertain market in early January.

Planetary progressions provide another window on possible future price trends.  The tertiary progressed chart has been very bullish in recent months given the alignment of Jupiter, Neptune, Chiron, and Uranus.  That is the kind of multi-planet alignment one would expect for a parabolic move.  Tertiary progressed Mercury is also currently forming a bullish angle with natal Jupiter (5 Capricorn) so that could account for this latest December surge. 

One possible warning sign here is that the the progressed Moon will conjoin the progressed Jupiter-Neptune-Chiron alignment in early and mid-January.  This is bullish but could signal an interim top.  Mercury will also move past its alignment with Jupiter by this time and instead align with unpredictable Rahu (6 Capricorn) and Saturn (21 Leo).  Therefore, there is a rising risk of a significant pullback after this progressed Moon-Jupiter alignment on January 18. 

After some kind of correction over the next several weeks, Bitcoin could well rally again in March and April as progressed Sun is due to align with that very bullish Jupiter alignment.  Things look less positive after that after Saturn turns retrograde in late May while in alignment with the natal Sun (19 Sagittarius).  The rest of 2021 does not look very bullish for bitcoin as Saturn hangs around its 7th house cusp for much of the year.  Overall, there is some reason to think the parabolic rise may come back down to earth later this year.

Weekly Market Forecast

Stocks have generally moved sideways this week as stimulus confusion and a new virus mutation has weighed on sentiment.  The typical post-Christmas Santa Claus rally has been fairly tepid so far as stocks are very close to their all-time highs.

Some weakness is possible for the rest of this week as the Moon opposes Saturn and Jupiter tomorrow (Thursday).  The New Year next week begins with some decent bullish alignments of Mercury-Venus and Jupiter-Uranus-Chiron so markets may well move higher in the short term.   That New Year celebratory optimism seems unlikely to last, however, as Saturn is once again waiting in the wings.

For more details, check out my weekly subscriber newsletter which is published every Saturday afternoon (EST).   I outline the key technical and planetary influences for US and Indian stocks for the short and medium term, as well as currencies, gold and oil.