Sorry bulls, the Bitcoin price is slipping once again. Over the past day, the cryptocurrency has trended lower, falling to $10,050 as of the time of writing this. At 2.5% down on the day, BTC isn’t looking bearish per se.
Yet, with volumes decreasing and Bitcoin being caught in a descending triangle chart pattern, which analysts say implies a further price collapse, bearish traders have started to see their theories gain credence.
Popular analyst Dave the Wave recently noted that if you were to compare Bitcoin’s current price development to early 2017, a move to “the 7k range is within striking distance”, citing a potential fractal.
Jonny Moe has echoed this short-term bearish line. In the tweet below, he pointed out that Bitcoin’s recent price action has resembled the 2017 rally and the 2018 collapse, implying that history repeating may seen BTC plunge, potentially back to the $6,000 or $5,000 region.
Yet, an eerily accurate technical indicator is purportedly showing that bulls in this market will be able to fend off a collapse to $6,000.
Bitcoin Price Ready to Bounce
Over the cryptocurrency market’s relatively short history, recurring motifs have been established. One of these motifs is BTC bouncing off its 20/21-week moving average in bull markets to confirm the uptrend.
In 2017’s historical bull run, Bitcoin flirted with that level some five times, each time closing above that key moving average, then surging to fresh all-time highs in the weeks that followed. As prominent analyst Josh Rager has remarked, BTC’s recent lull is bringing it to this key moving average (currently around ~$9,500), leaving him wondering why everyone is “so bearish”.
Indeed, should history repeat itself, Bitcoin will only strengthen after encountering this key support, not weaken to collapse to $6,000.
Another trader, Mr. Anderson, has echoed this. He explained that while the cryptocurrency trading under $10,200 should be a cause for concern, Bitcoin has never failed to hold the support of key daily moving averages (which act much like the 20/21-week) in its “first test exiting a bear market”.
Bitcoin losing the support of these key moving averages would be a sign that the macro trend for the cryptocurrency markets are not as bullish as some have explained.
Strong Backdrop for Crypto’s Growth
While there is a chance that Bitcoin manages to lose support of the historical support, and instead falls through the aforementioned lines, the fundamentals seem to imply increased demand for BTC is well on its way.
Bakkt, the de-facto cryptocurrency branch of the Intercontinental Exchange, recently unveiled its Bitcoin custody product, which comes two weeks prior to the launch of physically-backed Bitcoin futures. Analysts say that Bakkt has a “critical mass” of adopters ready to use the platform, implying that once the futures gates open, BTC may see large inflows.
Also, the world’s macro backdrop has continued to grow ever tumultuous.
Traditional recession indicators have started to flash: the U.S. Treasury curve for the two-year and 10-year bonds has inverted, which last occurred in 2007; gold has started to rally as stocks have started to top out; global PMI readings have started to fall below 50, implying a recession; among many other indicators.
What’s harrowing is that this comes as many regions of the world have devolved into chaos — the U.S.-China trade war, Hong Kong protests, hyperinflation in Venezuela, an economic collapse in Argentina, and Brexit being the best examples of this harrowing trend.