Analyst: Bitcoin Isn’t ‘Hungover’ Anymore, But Don’t Expect A Rally Just Yet
As traders have begun to realize that the news regarding the financial status of Tether Limited (USDT’s issuer) and Bitfinex isn’t all too harrowing, Bitcoin (BTC) has recently stabilized. In fact, analysts have claimed that the crypto market’s lack of reaction to the seemingly bearish news shows strong fundamental strength, and may, in fact, be a precursor to a bull run.
Related Reading: Bitcoin Price Reaction to Tether Fiasco May Signal Strong Fundamental Strength
However, a number of chartists have recently taken to Twitter to note that contrary to popular belief, Bitcoin isn’t poised for a rally just yet.
Bitcoin Could See One. More. Drop.
Since BTC has become a liquid, tradable asset, it has followed short-term and long-term trends, most of which can be charted and extrapolated for price prediction purposes. One popular technical analyst, Brian “The Rational Investor” Beamish, argues that if Bitcoin follows its four-year cycle again, a move lower may soon be inbound.
As depicted below (chart courtesy of Beamish), Bitcoin’s price action in 2017 was evidently a “blow off top” and 2018’s was “the hangover,” two macro trends seen in the previous bubble. If Bitcoin continues to follow its trend, 2019 will see BTC rally tremendously, but not without another influx of capitulation first. Beamish suggests that a move to near December 2018’s levels will come in the coming months, potentially as soon as June.
And he isn’t alone in touting this belief. Through the medium of a Trading View post, Magic Poop Cannon, a somewhat ill-named analyst that predicted Bitcoin’s drop to $3,200, noted that BTC’s current chart structure is almost identical to that seen before the “second bottom” in 2015. (For those not versed in crypto market history: in 2015, BTC fell below $200 once, and then touched $200 again months later.)
Magic explains that Bitcoin’s current price action, the 50-week exponential moving average, 50- and 200-day moving averages, Fibonacci retracement levels, and Relative Strength Index (RSI) readings are all looking eerily similar in structure to that seen in mid-July 2015. And thus he wrote that if BTC tracks its historical trend, the golden cross will form (check), a trading range of $5,000 to $5,300 will hold until May 7th (check), and will collapse to $4,025 by the end of May. He explained further:
“Based on this comparison, from a technical standpoint, I have absolutely no reason to believe that we won’t retrace to at least the 0.618 [Fibonacci retracement], which is just above $4,000. People who think we are just going to skyrocket above that major resistance around $6,000 are delusional. It took months of testing for us to break down below that level. It will take months of testing for us to break out above it.”