Bitcoin monthly candle close signals possible mega rally in December

Bitcoin price is showing resilience above the $15K level and history suggests a broader rally may occur in December.
Bitcoin price is showing resilience above the $15K level and history suggests a broader rally may occur in December.

Historically, when a Bitcoin (BTC) monthly candle closes above previous candles, the digital asset has seen a prolonged rally.

Atop this high time frame pattern, Bitcoin’s monthly candle in September closed above $13,000 for the first time since 2017. Furthermore, the dominant cryptocurrency has shown signs of a clear breakout throughout the past two months.

BTC/USD monthly chart. Source: TradingView.com

Why Bitcoin may be at the cusp of a new rally

In terms of the "BTC rally" narrative, the timing for a new Bitcoin rally makes sense. First, and perhaps most importantly, Bitcoin is currently in a post-halving cycle.

Every four years, Bitcoin undergoes a block reward halving which reduces the pace at which new BTC is mined by 50%.

The price of BTC typically peaked 14 to 16 months after the halving in the past two cycles. Hence, a peak for the next major rally in mid-2021 would be historically relevant.

Second, as Cointelegraph reported, there is a low level of interest coming from the mainstream and new retail investors. The majority of the demand for Bitcoin is seemingly coming from whales, high-net-worth individuals and what analysts describe as “smart money.”

BTC futures volume by exchange. Source: Digital Assets Data

As shown in the chart above, this increased participation can also be seen in the rising volumes across Bitcoin derivatives markets like CME, Bakkt and LedgerX and centralized exchanges offering futures trading. 

In 2017, Bitcoin saw massive inflows of new retail money flowing in the U.S., South Korea and Japan. Consequently, spot volumes exploded within a short period, taking BTC to $20,000.

This time, although spot market volume is rapidly growing, according to data from Digital Assets Data and Arcane Research, mainstream interest is nowhere close to 2017.

Monthly BTC transaction volume (USD). Source: Digital Assets Data

As such, there is headroom for a broader rally in the foreseeable future, especially if retail interest spikes.

What could restore mainstream appetite?

Three years ago, there was a mainstream frenzy around Bitcoin and cryptocurrencies in general because they surged significantly higher than stocks and other risk-on assets.

New retail investors were allured by the unprecedented volatility cryptocurrencies provided, causing Bitcoin to rally to a new all-time high.

Currently, Bitcoin is demonstrating a parabolic uptrend wherein on the weekly and monthly charts, it is rising without major pullbacks. The sheer momentum of BTC, if it continues to increase without a large correction, could cause the resurgence of mainstream interest.

As traders and analysts point out, investors' perception of Bitcoin is noticeably improving as a growing number of large companies and billionaires add BTC to their portfolios.

Most recently, as Cointelegraph reported, billionaire hedge fund investor Stan Druckenmiller became the latest high-profile investor to disclose his investment in Bitcoin.

Based on this trend, Michaël van de Poppe, a full-time trader at the Amsterdam Stock Exchange, said that the market sentiment would likely remain bullish. He wrote:

“After Michael Saylor and other companies allocating money towards #Bitcoin, the time has come for Stan Druckenmiller. It's just a matter of time until the next one jumps in, and the next one, and the next one. Bullish in general.”

Bitcoin price is showing resilience after achieving $15,000 for the first time since 2017. Following the large uptrend, historical evidence suggests a broader rally may occur in December.