Bitcoin has been on a bull run for quite a while now. The rally that started in April has resulted in a 117% increase in the price over the course of 11 weeks. However, the bullish momentum seems to have run out as the price has created lower lows for over four weeks now.
There have been many people using myriad tools and theories to predict the price of Bitcoin. The Elliot Wave faction thinks that the price will dump below $1,000, while the other faction believes that Bitcoin is currently experiencing a pit stop for an upcoming bull rally.
Here is a breakdown of opinion about the possible movement of Bitcoin for different time frames.
Lower Time Frame
The hourly chart for Bitcoin indicates the repeated formation of a rising wedge. The last pattern spread for 24 hours, following which, a bearish breakout of 12% occurred and pushed the price of Bitcoin from $10,800 to $9,500. Although the breakout was expected, the extent of the breakout was not. The reason for such a massive dip is a mystery whale that put a sell order of ~15,000 ETH on Bitstamp, causing a chain reaction that caused liquidations of longs worth $164 million.
However this time, the breakout could range from 5-6%, reaching the 0.382-fib level at $9,441, or proceed to dip a little further down to the support at $9,329. The price previously tested this support and briefly breached it on July 17 at 11:00 UTC.
Supporting the breakout are the 10, 20, and 50 moving average, all of which have been breached. The MACD indicator also shows the possibility of a bearish crossover, following which the breakout might take place.
Higher Time Frame
The daily chart shows a double top formation as the price crossed below the valley, between the tops. Although the price on the daily time frame looks bullish, the indicators are hinting otherwise.
The MACD indicator is massively bearish, with a broadening gap in the bearish crossover.
The Relative Strength Index has also broken below a support line that has been holding since February 2019.
The cumulative indicators clearly show that Bitcoin is massively bearish in the daily time frame.
The weekly chart for Bitcoin shows an overly bearish scenario for Bitcoin, the occurrence of which seems highly unlikely to most. However, it is similar to the EW predictions. Aldous Huxley said it best,
“At any given moment, life is completely senseless. But viewed over a period, it seems to reveal itself as an organism existing in time, having a purpose, trending in a certain direction”.
Bitcoin, stocks, and more importantly, crash cycles follow this behavior over larger time frames. This repetition of similar patterns over different time-frames is called a “fractal.”
Read more about the fractal similarity between Bitcoin and Gold, or the DotCom bubble, here.
On to the actual fractal pattern exhibited by Bitcoin over a weekly time frame. Bitcoin peaked in December 2013, following which was a bear rally and a slight increase in prices. While in hindsight, it is clear that the prices didn’t breach the previous highs, for people at that point in time, it would have felt like a bull run.
This exact scenario is happening with Bitcoin on a weekly time frame. Although a lot of people firmly believe that this is the bull run, this might end up being a fakeout like in 2013-2014.
What’s more interesting is that during this fakeout rally, the price of Bitcoin was ~70% away from breaking its previous highs. Surprisingly enough, the same is true now. The price of Bitcoin on June 26 was only 30% away from reaching its previous high. However, it did not and the price decided to undergo a correction.
Back in 2014, the price broke its previous lows and dipped approximately 50% from the highs that everyone thought was a bull rally. The important takeaway from this is that this could not be the bull rally that everyone has accepted it is.
Supporting the above scenario is a bearish crossover hint from the MACD indicator. Similar circumstances were last seen after the rally of 2017.
Are you a believer in the fractals yet?
Although we are only halfway through July, Bitcoin’s monthly chart has developed the first red candle after five consecutive months of green candles.
The RSI for the monthly candle confirms the bearish hypothesis. However, the MACD rejects it.
- Daily Time FrameBearish Breakout
Target: $9,500 to $9,300
- Weekly Time FrameUber Bearish [Tread Carefully]
Target: Expect a retest of December 2018 lows.
- Monthly Time FrameRSI: Bearish
The above predictions are opinions and are to be taken as such. DYOR!
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