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Bitcoin’s bottom is one of the most debated and argued topics in the cryptocurrency community. While some enthusiasts argue that Bitcoin bottomed in 2018 when the price of Bitcoin hit $3,122, others claim that the bottom has not yet formed. In this article, we will address facts and moves made by Bitcoin in the past and try to extrapolate them to prove that the bottom for Bitcoin is yet to be formed.

Weekly Chart

Source: TradingView

The weekly chart shows the price of Bitcoin being supported by the 200-weekly moving average while being compressed by the 20-weekly moving average. Bitcoin has been known to respect the 200-weekly moving average, since the prices have never fallen below it since 2015.

Bitcoin might proceed in either of two scenarios. The first move, which is to the upside, would mean that Bitcoin has to break the 20-day moving average that has been keeping the prices from moving up for almost a year.

The alternate path that Bitcoin could take is to break the 200-weekly moving average, which would spell disaster and a massive collapse of the price, quite possibly similar to the move that Bitcoin took when it plunged from the $6,000-level.

The Stochastic RSI shows that the prices have reached an overbought zone during a strong downtrend, which indicates a potentially disastrous move to the downside. This, in turn, reassures Bitcoin’s move to the downside.

Source: TradingView

Moreover, the September 2015 price action of Bitcoin produced a pattern of RSI that is similar to that of March 12, 2019. This further proves that Bitcoin’s upcoming move is to the downside.

On September 29, 2014, the RSI dipped into the oversold zone, which could be easily confused as the bottom, but the price fell from $1,156 to $276, which is a total decrease of 44.8%, creating the actual bottom for Bitcoin in 2015.

Considering a similar drop for Bitcoin in the current scenario, the price of Bitcoin would dip from $3,852 to $2,126.3 in the upcoming future.

Daily Chart 

BTC Price vs BTC Shorts

Source: TradingView

The daily chart shows a relation between the number of shorts and the price of Bitcoin. The number of shorts is indirectly proportional to the price of Bitcoin; when the number of shorts increases, the price of Bitcoin tends to decrease.

At press time, the number of shorts was minimal, which indicates that the shorts have room to move to the upside. As and when that happens, the price will also move to the downside.

Moreover, the decreasing volume of Bitcoin in the one-day time frame shows that the price is getting coiled up and ready for a massive volatile move.

Fundamentals

Source: Hackernoon

The chart seen above shows a comparison between variables like the 1 year+ UTXO, Block reward halving etc. UTXO stands for the unspent output from bitcoin transactions; the UTXO age indicates the last time Bitcoin moved. The data for the 1 year + UTXO when plotted gives the green line as seen in the chart above.

Between 2014 and 2016, the Bitcoin price bottomed after the UTXO line rose by 68%. At press time, the UTXO line has grown up 62%, which means that the bottom for Bitcoin has not been formed yet.

Conclusion

The weekly chart provides two scenarios, both of which support the movement of Bitcoin to the downside. The first scenario includes the 20 and the 200-weekly moving averages converging, thus restricting the price movement. This is accompanied by the RSI indicator creating the same pattern as it did back in 2015.



The second scenario shows Stochastic RSI indicator hitting the oversold condition in a downtrend, which proves that the price is bound to move downward.

The situation right now is quite similar to the famous “Schrodinger’s Cat Experiment,” we can only know for sure the path Bitcoin will take only after it does. The data above, the technicals and the fundamentals, indicate a downside movement for Bitcoin.





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Akash is your usual Mechie with an unusual interest in cryptos and day trading, ergo, a full-time journalist at AMBCrypto. Holds XRP due to peer pressure but otherwise found day trading with what little capital that he owns.

Bitcoin

Bitcoin [BTC] and the US Dollar: Halving mirror effect on fiat would result in FOMO explosion

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Bitcoin [BTC] and the US dollar: Halving mirror effect on fiat would result in FOMO explosion
Source: Unsplash

Bitcoin’s halving, scheduled for May 2020, has everyone talking, with many focusing on the mining rewards that will be enforced after the event.

One among these theorists is Anthony Pompliano, Managing Partner at Morgan Creek Digital, and outspoken Bitcoin bull. In a recent tweet, Pompliano equated the top cryptocurrency’s halving principle to the top fiat currency, the US Dollar [USD].

Pompliano focused the effect on the banking class, which has been leaning towards the cryptocurrency market off-late with the crypto-craze turning the likes of Fidelity, Etrade, and JP Morgan. Another important premise for the USD-halving effect was the ‘unlimited supply’ of the fiat currency, which can be minted by the US Federal Reserve, unlike Bitcoin which has a fixed cap of 21 million.

The Morgan Creek executive suggested, based on the above premise, that if the USD endured a periodic halving, bankers would be “FOMOing” all over the place.

His tweet, in full, hypothesized,

Presumably, Pompliano’s tweet was meant to reflect the supply-control inconsistencies of the USD versus Bitcoin, and the reaction of the banking class to the same, from an investment point of view.

Frances Coppola, a prominent financial journalist, hit back at Pompliano for mulling this mirror effect from within his “bubble.” She stated that USD supply is decreasing due to the Fed ‘burning’ fiat currency, rather than printing more of it, with the intention of reducing the supply on a “permanent” basis.

She responded,

Pompliano responded by questioning if Coppola believed that the US government does not engage in the printing of its fiat, to which the latter responded that her statement was in reference to the Fed “reducing the supply” by burning USD.

Despite this back-and-forth and the “printing” and “burning” of fiat currency, as opposed to cryptocurrency, is the will of a single entity, the US government. On the flipside, Bitcoin and its halving takes place with the production of every 210,000th block, or every four years.

This halving cuts rewards, which currently stand at 12.5 BTC per block and are set to drop to 6.25 BTC per block in May 2020, thereby aiming to self-control the supply of BTC in the market. As mining rewards dip, miners would shy away from the market as their profits are cut in half. This ‘fear’ would cause an increase in the price for the cryptocurrency to continue production. Hence, the inflationary effect is balanced.

Unlike the USD, Bitcoin being decentralized does not have one entity controlling supply. Hence, “printing” or “burning” cannot take place at will to control macroeconomic factors. This point, despite not being emphasized by Pompliano, is an important demarcation between Bitcoin and the fiat world.



To further the debate, Coppola added that the halving would in fact, dent Bitcoin’s prospects of being a world currency. In light of the cryptocurrency falling short of this feat, she stated, “Bitcoin is an asset, not a currency,” referencing the words of Chris Cook from Market 3.0.

Cook’s “Currency paradox,” detailed the equation of Bitcoin as a method of payment relative to its drop in liquidity that will happen periodically with the passing of every halving. The “Currency paradox” read,





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