Bitcoin Bulletin Midweek Market Update
Amid highly bullish sentiment, it’s worth taking a look at the big picture for likely bitcoin price action over the coming days and weeks.
This article is for information only. Bitcoin Bulletin will never give you trading or investment advice.
Bitcoin is sat at a critical point. Having moved as high as $5,627, it is now decision time. $5,600 is a resistance zone marked by the brief pause bitcoin took when it plummeted from $6,000 in November, ultimately falling as low as $3,100. It was the Last Chance Saloon for the bulls back then, so it makes sense that it would be an important level to watch now on the way up. (At the time of writing, bitcoin has just dropped $150 within an hourly candle, so the correction may have started – assuming this is not another shakeout.)
Even if bitcoin does break $5,600 convincingly, there is very little room for upward movement before encountering $6k, which will prove some of the strongest resistance bitcoin has ever seen. Price bounced off this level multiple times and with extremely high volume through 2018; breaking it will not be easy. Consequently, buyers face far more risk than sellers, at least in the short-to-medium term.
One seemingly positive signal was yesterday’s long-awaited Golden Cross: the 50-day moving average crossing up over the 200-day MA, a classic bullish sign that appears to have encouraged traders to go long and pushed bitcoin up to $5,600. However, a Golden Cross does not automatically mean further gains. If price falls below $4,500, we will see another Death Cross soon after. This actually happened in 2015, before a second Golden Cross – at which point, bitcoin finally did enter a bull market.
Sentiment at this point is positive – arguably too positive. The Fear and Greed Index reads almost 70 once again, somewhere it has never stayed for long before a price correction.
And so, while bitcoin has made exceptional gains this year, we would be remiss if we did not inject a note of caution into that bullish sentiment. Some food for thought: Bitcoin’s recent high of $5,627 is a 80% gain from the $3,122 low of 15 December. Two months after its capitulation to $152 in January 2015, bitcoin rose to $298 – a 96% increase. It subsequently fell to $210 a month later, bouncing above $300 again before falling back below $200 in August. Only then did BTC stage a recovery and begin a new bull market.
Finally, as if to prove that markets are driven by insider activity, Ripple CTO David Schwartz has recently been forced to explain why he sold his XRP, to the consternation of some of the community.