Whereas Bakkt purchasers will have the ability to deposit their funds into the Bakkt Warehouse subsequent week on Sept. 6, Bitcoin value is trending downwards after falling under $10,000 within the run-up to the occasion.
So is that this already priced in or the market cycles are simply repeating themselves? Let’s check out some key similarities to earlier bull market cycles.
Similarities I & II: 100-week MA & 21-week EMA offering assist
A typical dialogue currently on Crypto Twitter means that there’s a confluence between the so-called Bitcoin (BTC) value “bubble” prime of 2017 and the final prime on the finish of July at $13,935. In a way, parabolic actions are inclined to repeat the identical phases again and again. Nonetheless, there are some substantial variations between them.
The highest of 2017 got here on the finish of a market cycle, which primarily began with the affirmation of the 100-week Transferring Common (MA) and 21-week Exponential Transferring Common (EMA) throughout January 2016.
Nonetheless, the highest of July 2019 was primarily the primary peak above the 100-week MA and didn’t face the euphoria corresponding to the interval in December 2017. So, are they comparable?
Mainly, throughout the entire bull market of 2016–2017 there have been a number of parabolic actions ending in a retracement.
The beginning of this was the interval throughout This autumn 2015 and the start of January 2016 by which Bitcoin value ended the bear market with a parabolic transfer and located assist on the 100-week MA and 21-week EMA.
After this affirmation the market has seen a number of corrections of 30-40%, that are fairly wholesome for an upwards trending market.
With that in thoughts, it makes extra sense to match the earlier parabolic motion in the direction of the primary parabolic motion popping out of the bear market in 2015, as that was the kickstart of a brand new cycle.
Counting on the chart, this might imply that Bitcoin value might face one other check of the 100-week MA or the 21-week EMA to substantiate the bullish perspective and face a interval of accumulation previous to the halving occasion.
The previous halving occasions on Litecoin and Bitcoin noticed upwards value actions a number of months previous to the precise occasion. If historical past repeats itself, we might see some upwards actions in Q1 of 2020.
Similarity III: 200-day Transferring Common assist
One other indicator of a bullish market is the assist of the 200-day MA. Throughout the earlier cycle, Bitcoin at all times discovered assist on the 200-day MA and, in the course of the later phases, additionally on the 100 MA, which is at present transferring round $7,500.
In the meantime, the newest BTC value drop under $10Ok means it simply misplaced the 100 MA, which is corresponding to the beginning of the final cycle in January 2016.
The previous few months haven’t been good to altcoins. Whereas Bitcoin value is transferring upwards and continues to vary, altcoin traders are punished an increasing number of by the market.
This results in the worry of shopping for altcoins and we’re getting caught in a vicious cycle. Nonetheless, we have now been right here earlier than.
Again in 2015 — whereas Bitcoin was transferring from $196 to $505 — altcoins didn’t comply with go well with. As an alternative, they started to maneuver when Bitcoin value bottomed out of its first parabolic run on January 15, 2016 (the contact of the 100-week MA and 21-week MA confirming the underside).
If we check out an altcoin market cap dominance chart, it’s simple to see that it has retraced right down to the bottom degree in two years, whereas the RSI is exhibiting a degree of 22. Which means altcoins have been being bought closely in the course of the previous interval.
Notably, a possible assist degree and a trendline are coming into play. Akin to the start of 2016, through which the dominance of altcoins fell from 16% to eight% — this occurred previous to huge upwards actions. For instance, Ether (ETH) went up by 1700% within the months after, Vertcoin went up by 800%, and many others.
Evaluating these two analyses with the technical perspective of the market, it’s to be anticipated that Bitcoin wants a pure interval of accumulation, by which altcoins will ultimately catch up and transfer alongside with BTC/USD.
To this point, altcoins have been following Bitcoin (e.g. Bitcoin value all-time excessive in December 2017, altcoin all-time excessive in January/February 2018).
In different phrases, this leads me to imagine that altcoins will begin to transfer as quickly as Bitcoin is ranging/bottomed out from this parabolic transfer.
Complete market cap excluding BTC
Complete crypto market cap excluding Bitcoin. Supply: Tradingview
The whole market capitalization (excluding Bitcoin) has proven a transfer upwards to the $125 billion space of resistance, which acted as a assist throughout 2018 and retraced down since then.
In keeping with the chart, it’s at present testing an essential degree. If the market is ready to discover assist right here (at $62–66 billion), the outdated resistance of November/December 2018 will act as a assist.
It will lead in the direction of a brand new greater low, and probably the disbelief part and a brand new cycle. The present market capitalization of altcoins is $66 billion, which is the same as the market capitalization of altcoins in March 2019 when the worth of Bitcoin was $four,000. Merely put, that is the final word carnage for altcoin holders.
At this level, Bitcoin value has damaged an essential trendline. This brought about the worth to drop from $10,200 to the assist degree of $9,300, which is being examined for the third time as we communicate.
In a bullish state of affairs, the worth has to interrupt the $9,800 degree (outdated assist earlier than the dropdown) and reclaim that as assist. If Bitcoin is in a position to take action, then we’re aiming at $10,800 once more (trendline and horizontal resistance zone).
If Bitcoin gained’t have the ability to break the $9,800 degree once more and turns it into resistance (or the $9,650 zone), the decrease assist ranges at $eight,900 and the doable space round $eight,500 are prone to be examined, given the prior evaluation of the 100-week MA ranging round $eight,500 and the CME futures hole at $eight,500.
In case of a bearish breakdown, it may be anticipated that the drop will probably be fairly brief. If we flip to Crypto Twitter, the bulk tends to imagine in a transfer in the direction of $eight,500.
This might additionally result in a really transient drop, which might be purchased up shortly, or to a transfer that by no means occurs on that degree (frontrunning). After all, it’s fairly widespread that when the bulk expects a transfer to occur, the precise reverse happens.
All in all, the actions of Bitcoin value are seemingly pure and wholesome for an upwards trending market, and provide alternatives to purchase the dip.
The views and opinions expressed listed here are solely these of the writer and don’t essentially mirror the views of Cointelegraph. Each funding and buying and selling transfer entails danger. It is best to conduct your individual analysis when making a choice.