At least for the time being, Bitcoin (BTC) has lost steam. Since peaking at just shy of $14,000 in late-June, the cryptocurrency has seen a 35% retracement, falling to as low as $9,100 earlier this week.
Related Reading: Bitcoin Volatility Surges Since February of 2019; Is Another Big Move Imminent?
With this strong correction, which comes shortly after many analysts were calling for Bitcoin to break $20,000 lickety-split, BTC has purportedly broken its parabolic trend. The trend, as depicted by many analysts, has held for over six months, making this break somewhat of a bearish sign.In fact, as Peter Brandt, a legendary commodities trader, pointed out recently, a violation of the parabola could see BTC retrace by 80%, implying a price of $2,800 (actual 80% correction) or $5,000 (80% correction of rally), depending on how you analyze charts.
Per previous reports from NewsBTC, the Bitcoin maximalist who has famously claimed that more than 95% of altcoins are likely to fail stated:
“If current parabolic phase is violated, we could expect either an 80% correction of 7-month advance or much smaller correction w/ definition of new parabola w/ shallower slope. $BTC Note formation of possible 2-wk H&S or H&S failure” he explained in a recent tweet.”While many have focused on the first scenario, which is obviously more eye-catching than the latter, historical trends suggest that Bitcoin is unlikely to hit $5,000, despite what bears may say.
Not the End of the World
No, Bitcoin breaking under its seven-month parabola is not the end of the world. Far from.Pay ZERO attention to accounts calling doom over break of intermediatei. parabolic advances and
One will break, a new one will form. We're in a bull market🐂, don't get shaken out. — MS📈 (@singhsoro)
ii. price channels.
What’s more, Crypto Hamster recently pointed out that the one-day Relative Strength Index (RSI) and the Stochastic iteration of this indicator were at their lowest levels since at least February when BTC hit $9,500.
The one-day Moving Average Convergence Divergence (MACD) tapped the zero level, despite the fact that Bitcoin is in a raging bull market according to most analysis. Also, the Elder’s Forse Index, an indicator meant to exhibit the strength of moves, was at its lowest since November 2018; and historical volatility was almost at 100%, implying a move to the upside to return volatility to levels deemed normal.Related Reading: Bitcoin Suddenly Surges Past $10,000 as Bear Trend Dies; Factors & Trends
Most importantly, though, this retracement is par for the course. You see, if this is truly a bull market, a 30% to 40% correction every few months is entirely normal. As CryptoSlate’s Thies reminds his followers, the rally seen in 2015 to 2017 saw BTC fall by 31% to 40% over five times, retracing to touch a key resistance-turned-support level, before continuing higher.Looks very similar to what we are seeing now. — Crypto Thies (@kingthies)
Bull run in 2015-2017 included run-ups, typically followed by a retrace to touch the top of the prior high. These drops ranged from 31-40%, before rinsing/repeating onward.
What’s Next for Bitcoin?
So, barring that BTC doesn’t collapse to sub-$5,000 levels, what exactly is next for the cryptocurrency? According to most analysts, a strong rally to finish the year strong.Further supporting his thesis, Lee stated on a Binance podcast that once $10,000 is breached, FOMO will result in a “fast and furious” move to $20,000, then a six-month appreciation to potentially $40,000.
This isn’t the only sign showing that $40,000 is possible. Per previous reports, Timothy Peterson laid out a model that suggested that since Bitcoin gained 180% year-to-date (effectively the 2019’s first half), it has another 250% to run. This implies a price of $40,000.
There are some detractors to this theory, however. Namely Dave the Wave notes that should BTC follow its logarithmic growth curve, the asset could return to the $6,000 range by the end of 2019.Featured Image from Shutterstock
