Bitcoin broke a strong resistance line that had pressured the price to stay under for almost a year. This has caused some to speculate that Bitcoin might have started its bull run. The price of Bitcoin was $4,011 and the market was at $71 billion, at press time. The 24-hour price change showed a surge of 3%.
Rising Channel/Ascending Channel
The 4-hour and the daily chart of Bitcoin showed the formation of a rising channel pattern, which is similar to the one that was formed in December 2018.
The Rising Wedge usually presents a bullish buying opportunity by definition, but current conditions under which the pattern has formed indicates that Bitcoin will perform a contradictory move leading to a price dump. There are three conditions that support this theory of price dump.
- The declining volume.
- A strong declining resistance line that Bitcoin has respected for more than a year.
- The 20-weekly moving average [140-day moving average] provides yet another strong resistance for Bitcoin.
Rising channel or Ascending channel usually provides a bullish buying opportunity, but the declining volume at the breakout point must be high, which is a criterion for the pattern; but the 4-hour chart and the daily chart show that the volume is in a declining trend. However, if there is a sudden surge in volume, then the price might break to the upside.
In addition to the declining volume, a resistance line has been keeping the price of Bitcoin under since February 2018. Although Bitcoin breached it momentarily, the candle is yet to be closed. The price could be testing the resistance and only time will tell if it will actually stay above it.
The 20-weekly moving average or the 140-daily moving average is also serving as resistance. Similar to the declining resistance, Bitcoin breached this line and might be testing it.
Supplementing the above conditions, the 4-hour chart presents resistance at 3 important levels: $4,060 to $4,100 and $4,400. Even if the price decides to break the rising wedge in a bull trend, it would be rejected at these above-mentioned levels. If the price remains above these key levels, then it can be argued that Bitcoin has started a new bull rally.
Bitcoin is still supporting the 200-weekly moving average, but the 20-weekly moving average and the 200-weekly moving averages are converging with each passing week. The price broke the 20-weekly moving average consistently for the second week. However, the volume is minimal, indicating that this move might not hold.
Additionally, the volume has consistently declined, but the price has increased; this is a classic divergence move, which will not hold for long.
The Stochastic RSI showed that it has hit the top/oversold zone. The Stochastic and the signal line showed signs of a bearish crossover, since there is no room at the top and hence, the only way it can move from here would be to the bottom. This would mean that the price will also decrease.
The price of Bitcoin is currently testing resistance in every possible scenario. If the price holds above key resistance levels, this could be a sign of Bitcoin’s bull run. However, this scenario is less likely, as other aspects of Bitcoin indicate a contradictory view.
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Bitcoin [BTC] Halving: CoinMetrics pegs top-crypto to rise above $20,000 peak in late-2021
With a year left for the highly anticipated Bitcoin [BTC] halving, many expect the price of the top-cryptocurrency to surge prior to May 2020. Analysts have previously opined that three months to one year before the halving does the price of the cryptocurrency move up.
A new piece of research from the cryptocurrency analytics firm, CoinMetrics, suggested that in addition to the precursor pump, Bitcoin [BTC] will reach its “local peak” 18 months after the halving.
CoinMetrics charts the price of the top coin, divided based on the 2012 and 2016 halving, showing a noticeable trend. A little more than a year after the first halving when the 210,001 block was mined, the price of Bitcoin surged above $1,000 for the first time, in December 2013 to be precise.
Next, During the July 2016 halving, the coin was trading at just above $600 and within the suggested period of 18 months, the top virtual currency saw its second peak. On 17 December, the coin reached a never-before-seen high of over $19,700 as the Chicago Futures exchanges embraced the digital assets market.
With the price of Bitcoin over $5,000 for the first time in over four months, and the precursor halving bulls on the horizon, the price could surge. Furthermore, based on CoinMetrics’ inference, Bitcoin will see its third peak, higher than $20,000, by the close of 2021, eighteen months after the May 2020 halving.
The halving protocol was placed in the original whitepaper to thwart inflationary pressure that would arise with more blocks mined and more Bitcoins supplied. Historical charts prove that this objective has been adhered to, with a constant drop in the inflation rate with the two previous halvings.
In 2012, the inflation was over 25 percent and immediately after the miner reward reduction to 25 BTC per block, it dropped to under 15 percent. A bracket between 7 percent and just under 20 percent sustained until the second halving in July 2016.
The second halving saw a decline in inflation rate to under 5 percent for the first time in the coin’s history, which has been maintained till today. CoinMetrics pegs the inflation, at press time, to be 3.8 percent. Furthermore, if the historic trend continues, the inflation rate would drop by more than 50 percent to 1.8 percent in May 2020.
Based on the current market and using a historical outlook, analysts suggested that 2019 will be the year of building the industry while the price effect will manifest next year, with the halving being at the very core. Many believe that institutional interest on the rise and the growing crypto-adoption surge could result in a bullish 2020.
Charlie Lee, BTCC’s co-founder suggested in December 2018 that Bitcoin’s next rally will begin in “late 2020”, months after the halving and would peak in December 2021 at 333,000. However, the precursor to this rise would be a January 2019 bottom of $2,500 which did not materialize.
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