I’ve been away for a few days on an impromptu little vacation, hope you didn’t miss me too much!
I probably chose a good time; markets have been pretty dead, and all people want to seem to talk about is Trump vs BTC. Perhaps I’ll deal with that topic myself (because there are some things which need to be said), but I’ll leave that for another day.
I tried not to check BTC prices while I was away – a task in which I failed miserably. The typical poor reception at our holiday spot was unusually good, so like it or not, I kept an eye on Bitcoin. While away, I noticed a new pattern emerging, which is what this post is about:
First things first: I have re-calibrated my Fib levels to take the latest dip into account. That’s not strictly relevant to this post, but you will see those coloured Fib levels on some of the charts.
Most noticeable on the chart below is the possible converging triangle formed after the latest price dip to $10000. The triangle is neither inherently bullish nor bearish in construction, so that leaves BTC with options of either climbing or dropping in price; we’ll get to that a little later in this post. I say possible triangle because I’m not too sure if this is a triangle or perhaps just a something which will soon become truncated into a pennant.
As seen below, I believe that there is a possibility that this is a bull pennant. If that is the case, then we can expect BTC to either carry on climbing now, or perhaps about two weeks into the future (which is the rough time gap between successive high points in the current pattern. It could even remain trapped within the pennant for multiple additional bounces, in which case it would only break out about a month from now. By that stage the pennant would have become a triangle anyway, and the break would probably be positive due to the continued high volume of the market and the fact that decreasing volatility (as the triangle narrows) would inspire confidence in more timid investors.
On the other hand we could be looking at a downwards break. I’ve seen this pattern before: in mid-2017. During the first few months of the now famous bullish climb to $20000, Bitcoin went through a few of these calm periods where it consolidated and retraced before continuing its climb. We look to be in a similar position to what happened in the circled area below (in June 2017). Back then it was followed by a steep dip and then a rapid recovery and climb.
Zooming out you can see what happened after that. Also take note that even during the worst times of the 2018 bear market capitulation, the start-of-climb prices were never reached. The very bottom of the 2018 bear market stayed above that highest point of the June 2017 consolidation. Potentially this implies that the next major bear market may bottom above the levels we have been seeing lately (about $14000), though we could still have several similar consolidation periods and this particular one may be nothing special.
Whether we are looking at a converging triangle, a bull pennant, or some sort of repetition of the 2017 climb; the future of Bitcoin looks very bright. Fundamentally speaking, while there is a lot of talk about it, it appears that institutional investment hardly features in the cryptocurrency market yet, it still seems to be retail investors driving up the price. That means that Bitcoin has still got virtually unlimited growth capacity for at least next couple of years. I still believe we are only at the start of what should be a record-breaking bull run.
If BTC is to mimic the 2017 dip-and-climb, then it should find support in the $8800 – $7700 region (as indicated below). I’m basing that on the the 2017 event again: it found support at its previous brief consolidation level – which was not as well defined at the $8800 – $7700 consolidation support level that we have this time.
That’s all for now. Keep an eye on that triangle/flag as it narrows: things should get interesting towards the end of the month.
Yours in crypto
All charts made by Bit Brain using TradingView
"The secret to success: find out where people are going and get there first"
~ Mark Twain
"Crypto does not require institutional investment to succeed; institutions require crypto investments to remain successful"
~ Bit Brain