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The chances of an end of year ‘Santa rally’ for Bitcoin are slipping away. Its half year down trend has been maintained and does not look like reversing before the year is out. All hopes are now being pinned on the BTC halving in May next year, but will it really be the lifeline everyone wants?

Bitcoin Dumps Again

A couple of hours ago Bitcoin fell out of its three day consolidation channel and dumped to $7,100 according to Tradingview.com. At the time of writing it was trading just above this level but poised to drop into the high $6k region once again. The move marks a 3% loss on the day.

bitcoin

Bitcoin has lost almost 8% since the weekend and the down trend is strengthening. Analysts are all now in agreement that $6k is the next level where things may settle down for a while and this is likely to come before the end of the year.

This leaves all remaining hope on the BTC halving event which is due on May 14 according to the countdown. The halving heralds a number of bullish factors which include a reduced number of coins added to the total supply which increases the notion of scarcity.

Halving FOMO?

As block rewards fall from 12.5 to 6.25 BTC the asset’s inflation rate also falls below the central bank target of 2%. Bitcoin inflation will be 1.8% and with 18 million, or 86% of them, already mined that scarcity concept should drive demand.

Previous halvings in 2012 and 2016 saw Bitcoin prices rising after the event, not before. As industry analyst ‘PlanB’ points out it did not take over a year for the market to start surging.

“Well, it didn’t … look for yourself: in the chart the halving is when blue turns to red: the market immediately rises after a halving”

If history is to rhyme then markets should start gaining in mid-2020. The analyst added that the rise was slower in 2016-2017 because altcoins and ICO’s were stealing a bit of the thunder, but that is not going to happen in 2020.

Bitcoin market dominance is currently hovering just under 70% and has increased by 30% this year as altcoins melted down.

Another major factor to consider is the stock to flow model which defines the relationship between production and current circulating stock. This will double after the halving which is very important as there is no ability to inflate the stock.

The general scene is very bearish at the moment which is why many are claiming that there will be no major effect on prices from the halving. History has proved otherwise though and fundamentally the digital asset will be stronger than before in terms of perceived scarcity. Only time will tell if the previous patterns will play out again.

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Martin Young , 2019-12-04 06:00:03

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NewsBlock © 2019 - 2020 All rights reserved.

NewsBlock © 2019 - 2020. All rights reserved.


While Bitcoin’s price seemingly moves without rhyme or reason — collapsing by dozens of percent and embarking on face-melting rallies on a whim — the cryptocurrency market is filled to the brim with fractals.

Related Reading: Analyst: Bitcoin Price Likely to Fall to Low-$8,000s as Chart Remains Weak

A brief aside: A fractal, in the context of technical analysis and financial markets anyway, is when an asset’s price action is seen during a different time. This form of analysis isn’t that popular, but it has proven to be somewhat valuable in analyzing Bitcoin.

One recent fractal popularized by a well-known cryptocurrency trader is implying that BTC is going to return to the low-$7,000s in the coming days.

Bitcoin Fractal Implies Retracement to Low-$7,000s

A well-known crypto trader going by “Tyler Durden” on Twitter recently posted the chart below, which shows that a Bitcoin price fractal may be playing out. The fractal has four phases: horizontal consolidation marked by one fakeout, a surge above the consolidation phase, a distribution, then a strong drop to fresh lows.

If the fractal plays out in full, BTC could reach the low-$7,000s again, potentially as low as $7,100. This would represent a 20-odd percent collapse from the current price point of $8,800.

It isn’t only a fractal that is hinting Bitcoin has the potential to visit its lows. As we reported on Saturday, Bloomberg believes that if the GTI Vera Convergence Divergence Indicator flips red, a downtrend could push the cryptocurrency back to $7,300.

Related Reading: Stephen Colbert Pokes Fun at Bitcoin in Monologue: Mainstream Gone Wrong?

Can Bulls Step In?

But again, many believe it is irrational to have such bearish interpretations of the cryptocurrency’s chart at the moment. As reported by NewsBTC earlier, Popular crypto trader Mayne recently noted that the “people waiting for $6,000” are irrational. He quipped that Bitcoin retracing and consolidating after its fourth-biggest bull move in history ($7,300 to $10,500, a 42% gain) is perfectly par for the course, but noted that it’s totally possible we can go lower from $8,800.

The medium-term technicals support this.

Trader and CoinTelegraph contributor FilbFilb found that by the end of November or start of December, the 50-week and 100-week moving averages will see a “golden cross,” which he claims is far more significant” for the Bitcoin market that other technical crosses.

Also, a Bitcoin price model created using Facebook Prophet machine learning found that the leading cryptocurrency is likely to end the year at just over $12,000. What’s notable about this model is that it called the price drop to $8,000 months in advance, and forecasted a ~$7,500 price bottom for BTC.

To put a cherry on the cryptocurrency cake, Crypto Thies observed that when Bitcoin bottomed at $7,300, it bounced decisively off the 0.618 Fibonacci Retracement of the move from $3,000 to $14,000, which correlates with the two-week volume-weighted moving average. He added that summer 2019’s consolidation was marked by Bitcoin flipping major resistances into support levels, implying that a bullish reversal and subsequent continuation is likely possible in the coming weeks.

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Nick Chong , 2019-11-10 12:00:38

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