After a bullish first half to 2019, with Bitcoin reaching a yearly high of almost $14,000, we’ve seen the bears take command of market momentum and the BTC price erode to a recent low of $6,610.
This has led some analysts to suggest we’re back in a bear market, and need to drop even lower to critical levels before we can begin to move up. While other, bullish analysts suggest the opposite and that the last six months have been only a market correction.
So, where are we headed next? Will it be the Bulls or Bears who take hold of market momentum?
The Bearish Case
Some analysts believe we need to see a heavy correction to the $5,000-$6,000 range before we can expect the bulls to take charge.
CryptoBirb believes BTC will dump once more to the $5,400-$5,600, which coincides with the long-term 0.786 Fibonacci Retracement level. A level considered highly important for traders and one that they are more likely to step back in.
Tone Vays stretches it even further as he claims Bitcoin needs to drop to around $5,000 and meet the 200 weekly moving average (WMA). In a December 29th broadcast, Vays said, ‘I think we could have a little bit of a rally into the close, but I'm not really expecting anything above $8,000 any time soon. I'm looking for the next low to come in in the first quarter of 2020.’
Although Vays was wrong with his $8,000 prediction, we shouldn’t brush off his low $5,000 range prediction. The 200 WMA he uses to back up his prediction is a critical indicator for traders and will be a very strong support level.
Bitcoin’s cycles are gaged in approximately 200 weeks, which is also about the time of each block reward reduction, commonly known as a ‘halvening’. It could be argued then that the 200 WMA is more important when analyzing the Bitcoin price than most other assets.
Although Vays did claim we were out of the bear market last year, ironically just around the yearly high, he seems to have turned bearish again at least until we retest the 200 WMA.
For this to happen, it would mean an almost 40% drop from where we are now, which I think is unlikely, especially with the halvening approaching. But with that being said, the 200 WMA is seen as a key factor between a bull and bear market, and so it will be a key indicator going forward if he is right.
The Bullish Case
As stated, the Bitcoin halvening is approaching and that should play a significant role in market momentum. And if we look back at past market cycles, it suggests a bullish run could be about to get underway.
Bitcoin analyst Nunya Bizniz recently tweeted about this, saying in the two previous cycles, Bitcoin started to take off about 120 days (four months) before each block reward reduction.
In the same four-year period leading up to the previous halvenings we saw a steady rise in price, but it was the following 12-18 months where the parabola set in and we saw amazing run ups.
Unlike Eugene Fama’s theory which basically stresses that price should be baked into an asset when information is known about future events, like the halvening. Fundstrat’s Tom Lee stresses that the halvening can’t be priced in, however.
Lee articulates the market dynamics of Bitcoin are relatively unknown and totally different from traditional assets, and the halvening, therefore, can’t possibly be priced in.
He goes on to assert that Bitcoin could even see gains of more than 100% this year. As well as the halvening, he cites the ‘geopolitical tensions and the upcoming U.S. presidential elections,’ as determining factors for his prediction.
Analyst Murad Mahmudov disagrees with Tone Vays’ claim that Bitcoin would need to hit the 200 WMA before bulls could take control.
He tweeted the 200 WMA wouldn’t be met as the fall in price from July’s highs wasn’t actually a bear market, but merely a mid-bull cycle correction. Albeit a 53% correction.
Using the chart below, Mahmudov strenghtens Bizniz’ four-year cycle analysis, by theorizing the Bitcoin price was actually mirroring the performance of the previous market cycle.
Mahmudov backed up his claim by pointing out three other key moving averages that suggest Bitcoin could be about to surge higher.
Pseudonymous analyst, Financial Survivalism, is even more bullish on the mid-term price. After calling this week’s rise to $8,000, he believes the Bitcoin price will test all time highs before July 1st.
Bullish indeed, but Financial Survivalism does back up his prediction and goes into depth using an array of technical signals to present a solid case.
Among them he discusses 6-12 month Bitcoin cycles. And as we can see in the chart below, we could be entering a bullish period any time now, which the analyst cites the halvening event for why the next 6 month cycle will be bullish.
Financial Survivalism has turned bullish for the first time since June and claims it’s the first time he’s buying since then. He cites a recent golden cross with the 4 hour 50 and 200 EMAs, and the reverse of the weekly Lucid SAR for the first time since March 2019, as further evidence as to why he is super bullish.
Both bullish signals indeed and with the halvening approaching and the cycle reflecting previous ones, it seems harder to support the bears’ case than the bulls’.
With that being said, markets can be unpredictable, especially small cap markets like Bitcoin. On top of that, Bear trends can last way longer than anyone expects, even in new and revolutionary technologies.
Personally, I think this year will be bullish, but I’m not convinced the lead up to the halvening will be. I think, we’ll see more consolidation. A bit of volatile, sideways movement for a few more months before we take off and test a new all time high before the end of 2020.
What about you? Please leave your thoughts in the comments section below…
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