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All markets – such as Bitcoin – are cyclical and go through stages of peak euphoria before a correction brings investors back down to reality. Eventually, anger and depression kick in, and investors begin to fear the worst before the cycle reaches a low and begins to pick up once again and return to the mean.

But where is Bitcoin in its overall market cycle? Was this year’s run-up a disbelief rally before new hope sets in, or has the market on just now reached the complacency stage, and the real carnage is still ahead?

Where Exactly Is Bitcoin In Its Market Cycle?

Bitcoin, the first-ever cryptocurrency, has had a stellar 2019. At the peak of its parabolic run, it reached a price of $14,000 and at the height brought investors who bought the bottom as much as over 350% returns – no other asset compares to Bitcoin’s performance.

Related Reading | List of Crypto All-Time High Prices Shows How Far Market Must Recover 

The powerful rally has crypto investors convinced that the asset is about to embark on its next bull run, but with so much bullish bias in the market, could Bitcoin only now be reaching the complacency stage or a market cycle? If so, it would indicate that the real drop could soon begin, and a new, much deeper bottom could be possible.

This is according to the Wall Street Cheat Sheet’s “psychology of a market cycle” chart, which clearly demonstrates the various stages of a market cycle. According to one analyst, the pattern closely resembles Bitcoin’s price chart when zoomed out.

Following the 2014-2015 bear market, Bitcoin began a meager rally in 2016, bringing early adopters hope once again that the asset could soon be back in bull mode. 2017 later saw optimism turn into belief, thrill, and finally, euphoria as Bitcoin reached its all-time high of $20,000.

After euphoria, investors are typically still bullish, and assume the asset needs to “cool off for the next rally.” Following this, the real collapse begins, ushering in emotional states like anxiety, denial, and panic.

It could be argued that capitulation, anger, and depression kicked in after Bitcoin broke down from $6,000 support in November 2018, which took the price of the asset to the current bear market bottom at $3,150.

Related Reading | Bitcoin Low Timeframe Fractal Matches Weekly Price Action, But Is There More? 

However, Bitcoin investors and supporters remained bullish on the asset the entire time and were using the low prices as an opportunity to buy back in. The fact that sentiment has remained so bullish could suggest that the crypto market – namely Bitcoin – is still in the complacency stage of a market cycle, and what comes next could be the real capitulation that shakes out any remaining bullish investors before the cycle begins again.

Tony Spilotro , 2019-11-12 17:00:24

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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.

Featured Image from Shutterstock

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

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