Bitcoin Price Showing Similarities with previous Bull Market
While the price surged from $7,300 to $10,500 on the 25th of October 2019, the macro view starts to show similarities with the previous bull market. This article will focus on the similarities and possible perspectives of Bitcoin movements in the coming period.
This chart is an overview of the price movements of Bitcoin since 2015 and is showing similarities with the current market. Why is it showing similarities? Well, the market tends to move the same way as human psychology comes in to play, which makes markets comparable to each other. Not only in this market, similarities are drawn, but the same can also be done for the stockmarkets. Example; comparing the Dot.com bubble with the 1930’s Depression on technical analysis perspectives.
What shows this chart?
During the 2015/2016 period, a similar massive move occurred, which caused the price to $167 to $500, an increase of 200% over a matter of weeks. Similar to the massive move of Bitcoin earlier in 2019, rallying from $3,100 to $13,900.
According to that, the 100-Week Moving Average and Exponential Moving Average were vital signals marking bearish/bullish momentum on the market. With each of the movements, the moving averages were broken to the upside. In the 2015/2016 scenario, this leads to a new bull cycle.
Alongside with this breakthrough, a retest was done in the previous cycle (check the period around January 2016). A retest is also done in the current cycle, as the price hovered above the 100-Week MA during October.
A solid sideways market, bad sign for Bitcoin?
No, this is not a bad sign for the market. It’s a strong signal that Bitcoin isn’t retracing back down towards $4,000. A fast check of earlier market cycles gives a similar overview, as the market almost always needs to accumulate on a higher level before a new move.
In 2015/2016, a similar period occurred of half a year, which was the build-up for the upwards breakout before the halving.
Similarities are there in the current landscape on the market, as a similar range-bound sideways period is occurring since the parabolic push earlier this year.
Once again, that’s not a wrong signal. The market is accumulating on higher ground before continuing the trend (which is likely to occur with the market now).
Essential is a continuation of support in the green zones, as that’s the ‘range low’.
Is a bearish bias justified?
Being bearish in November is not a wrong cause, as the price has been correcting downwards. However, the year 2019 has been an incredibly positive year for Bitcoin as the price is still $5,300 higher than the start of this year.
So, is the bearish bias justified?
On a short term notice, it’s understandable, as the price is still correcting from its massive push earlier this year. However, corrections often lead to ‘buy the dip’ opportunities in upwards trending markets.
Doing technical analysis on the recent price movements, a push occurred from $7,300 to $10,500. This push couldn’t break the blue downwards moving trendline. Essential for a bullish outlook is the breakthrough of this blue line.
Since then, the price retraced to previous resistance areas and arrived at the yellow zone, which marks an earlier resistance & the golden Fibonacci ratio (0.618-0.65 area).
Would this provide further bearish perspectives for the market? On the short term, the price can continue moving south towards the $7,300 area if it’s not able to find buying pressure here. However, since the majority of the market is often wrong about price movements, it’s unlikely to see the price continuing these downwards movements below $7,300. Why? The current sentiment is quite bearish, and people are feared to step back in.
Additional with that, these retracements could provide an excellent buy the dip opportunity in a steady upward trending market as 2019 has been one for Bitcoin.