Analysis of Bitcoin state in the recent month. The most likely scenario for the cryptocurrency trend for the near future.
In this post, I applied the following tools: fundamental analysis, all-round market view, market balance level, graphic analysis, volume profile, trendline analysis.
Another month is over and it is time to sum up the results and update the trading scenario for Bitcoin.
As for its trend last month, it was clearly bearish.
In my last forecast with an updated global view on Bitcoin, I suggested that the low, expected within the price correction, can well be at 5800 USD. Finally, the market stopped at the suggested level, featuring a slight stop-triggering puncture down to 5755 USD.
Global scenario for Bitcoin at that time looked like a series of cycles with flattening range of the price swings.
According to the chart, after the target at 5800 was reached, a new cycle should start and the ticker should go up.
I’ll try to find out what the real situation is and if we may expect the price rise in future.
First, I’d like to note the market behaviour amid the news released. I have deliberately analyzed all the news for the last month to understand if there any fundamental reasons for such a crash.
If you study the past events very carefully, you’ll see that really bad news bit, able to affect the market, is the Bithumb exchange hack. Earlier, I would agree that the news could have crashed the thin and very young cryptocurrency market. But now, even the theft of $30 mln is not a disaster for the multi-billion cryptocurrency market that can press it down to the levels, it stood at just a few days ago.
Besides, I must note that the hack occurred already on June 20, after the market had passed most of its way down during the month (I marked the date of the hack with the red arrow in the chart below).
In addition, the drop itself occurred only a day after the hack, which emphasizes the artificial pressure on the market, aiming at drawing the BTC quotes as low as possible.
Manipulators almost managed to dump the market below the crucial level of 5800’ but it is very hard and costly to go against the positive news background that can’t be concealed now.
The most important events include:
- SEC announces that Ethereum is not a security;
- Facebook cancels the ban on ICO ads;
- Bithumb exchange pays back a half of the money missing.
I don’t even mention the daily news that large international corporations and even whole nations invest into blockchain technology and develop large projects.
This month, the situation is fueled by the news about the launch of the cryptocurrency DX exchange that was developed in cooperation with NASDAQ and based on its platform; and the growing information hype around the ETF launch for Bitcoin and other cryptocurrencies. All cryptocurrency media are actively spreading the analysts’ comments, who announce that Bitcoin should jump up to at least 35 000 USD after the instrument is launched.
These events create quite a strong resistance to bears; so, amid the positive expectations, I can hardly imagine that the market could move below the lows reached.
It is not cost-effective for the manipulators to go against the majority. It is far easier to follow the law of soft power and, instead of fighting with the crowd of hamsters, lead them and push the market up, triggering FOMO in the market and crowd’s panic buys.
That is the perfect environment for manipulators to take the profits and save up the resources for organizing another dump.
According to this idea, we won’t of course witness 35000. For me, personally, this figure looks rather like a nice sweet carrot for hamsters, who will follow it driving the market up.
But the rollback to 8000 was rather natural.
Summing up all the above, I may say that this fundamental analysis doesn’t contradict to the last month’s scenario, and the ticker can well feature a temporary rise up to at least 8000 USD.
Now, I suggest all-round market view, so that we examine the market from technical point of view.
Let’s start with the monthly timeframe.
You see that Keltner channel’s borders tend to getting narrower, which indicates the global sideways trend that doesn’t already suggest levels, close to 35 000 USD this year.
Inside the channel itself, the ticker broke through May’s low and rebounded from the moving average of Keltner channel.
Last month’s close is at 6391 USD. Currently, this level is the strong support zone on the way to the previous lows.
In the weekly chart above, Bitcoin is at the channel’s bottom border and a kind of going to rebound a little up. It is clear in the chart above that the levels of the weekly Keltner channel match to the monthly levels. The market balance average is at 7906. The point of control of the volume profile is very close to the level; so, it is a strong barrier to Bitcoin’s growth in the near future.
As for oscillators, both MACD and RSI stochastic are at the indicator window’s bottom border and indicate the potential for the reversal
In the daily chart, there is a whole series of bullish convergences of different scales; in general, it suggests a soon slowdown of the bearish trend, followed by the correction.
The market rebounded from the support zone that is marked by the narrow box, confirming the importance of these levels, and went upwards. In addition, RSI stochastic is already in the overbought zone, which can hinder the growth in the short run.
I must note, in spite of the rise during the last few days, Bitcoin is still in the bearish trend, which is proved by the yellow nine-period moving average below Keltner channel’s centre line.
In 12-hour time frame, it is especially clear that there a complete resistance zone around 7906USD -8682 USD, supported by the point of control in the volume profile indicator.
Finally, I think the new cycle to be round (see the chart above).
I have proved many times that Bitcoin rate is highly manipulated. The announcements about 35000 USD -50000 USD before the end of the year are nothing more than manipulations and the manipulators’ desire to create a new hype around the Old Chap.
You’ll understand that these forecasts are nonsense if you look at the BTCUSD chart with the target at 35000 USD, planned for 01.01.2019.
To reach the indicated levels, the ticker should move up from the current levels at a steady pace without any correction during 26 subsequent weeks, therefore, the necessary growth rate should be 1092 USD per week.
Is it possible? I’ll say, it is rather unlikely. Of course, anything can happen to the cryptocurrencies, but according to the common sense, it is could hardly be real.
Besides, just the same day, in addition to the news about the assumed launch of ETF, everybody was saying about closed futures for short positions and the start of DX exchange registering.
In addition, there are the following pieces of news:
- Bithumb paid 50% of losses back to its investors;
- Coinbase Custody provides the institutional investors from the USA and Europe with the opportunity to legally invest in the cryptocurrency market.
It is up to you to decide, if these consecutive positive events are the links of the same chain, or just a common coincidence. But I, personally, won’t believe in the levels of $35000 or $50000 in late 2018, or early 2019. If BTCUSD breaks through 8000, it will be a good bullish signal and an opportunity to buy with “minimum” risk for most long-term investors. That is the situation, when you should avoid large-sized longs, as then manipulators are the most tempted to make another dump.
The most likely scenario for the next few weeks seems to be the pump up to 7 900 USD – 8 600 USD, where Bitcoin is likely to continue its dramatic fall.
I wish you good luck and good profits!
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.