The price of Bitcoin is currently in a consolidation phase after formation of a recurring pattern twice within the span of a month. The current price of Bitcoin, at the time of writing, was $3,580, with the market cap hovering at $63 billion.
Bitcoin’s price action, as seen in the chart above, is the best example of history repeating itself. The overall trend of Bitcoin is a downtrend as it has consistently been forming lower lows as seen in the hourly charts.
There is a clear formation of a pennant in the price action chart, which breaks out to the top and then moves in a sideways fashion before dropping to retrace the same pattern all over again. However, it will be in a slightly lesser proportion compared to the one before.
Pennants usually show how the price gets caught up between forming lower lows as they head towards the peak of the pennant, where they have no more room, thus causing a breakout.
The first pattern started its formation on December 27, 2018, and it proceeded to ricochet between the trend lines consistently. The price broke out of the pennant pattern caused a massive spike of 6.56% as the prices rose from $3,838 to $4,090, The spike was followed by a sideways movement, which caused a sudden collapse in prices.
The sudden collapse in the prices took place in two distinct steps, which occurred at the 0.618 Fibonacci level. The 0.618 level or the 61.8% level is deemed as the most important level by most traders. The price drop happened from $4,026 to $3,618, making a pit stop at $3,812, which, in total, was a drop of 10.13%. By observation, it can also be noted that the second collapse was almost half of the first one.
The second pattern that formed, followed the footsteps of the previous pattern and the price broke out of the pennant at $3,625 and reached $3,728, which was a total percentage increase of approximately 3%, which is half of the previous breakout. This followed by yet another sideways/downtrend movement, which collapsed again at the same Fibonacci level as the previous pattern. The collapse took place from $3,689 to $3,514 with a stop at $3,587 at the 0.618 or 61.8% Fibonacci level. The total decline was 4.74%, which is approximately half of the previous collapse.
Moreover, before the formation of the second pennant, the sideways movement of the prices found support at 0.886 or 88.6% Fibonacci level of the first pattern which was eventually broken as the prices fell lower.
At the moment, the prices are being supported at the 0.86 or 88.6% Fibonacci level of the second pattern, which is at $3,514, a perfect correlation. If the prices ever decide to break below this support, there is going to be a collapse.
The one-day chart also shows a consistent downtrend with prices forming lower lows, indicating a strong bear trend for Bitcoin. Bitcoin’s fall into the abyss is currently being supported by two supports, the first and the imminent support is at $3,477, which was tested multiple times. The second support is the lowest that Bitcoin reached in 2018, which is at $3,139.
The volume indicator shows a very important indication of decreasing volume that has been in play since mid-November, which confirms that the price will undergo a massive and sudden change in the future.
The change, as per the technicals, indicates that the price should move downwards, however, the prices could go either way.
The Relative Strength Index also shows a declining trend, indicating that the selling momentum for Bitcoin is increasing.
The one-hour chart shows a recurring pattern in which the prices are being supported at the 0.86 Fibonacci level. If the price ever decides to drop to below the current support it would face the next immediate support at $3,136. In a worst-case scenario, the price would go into a free fall until $1,900 and the price was last seen at this point on July 14, 2017.
If the breakout happens to the upside then the price would have no resistance until $4,422 to $5,000, where the prices will be tested before it moves up. However, the one-day chart shows a declining volume trend, which indicates a strong movement in price that might happen in a few days.
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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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