Nobody could have predicted what has happened to Bitcoin over the past month. A break past $4,200 was inevitable, but a surge past $8,000, doubling its price, has shocked the nascent crypto space. Where BTC goes next will be paramount and moving averages will play a big role as they have done before.
Correction is Coming
Markets always correct and now that the ice from the crypto winter has finally melted, investors and traders will be looking for new entry points. Technical indicators are all flashing over bought for Bitcoin at the moment. For the third day in a row BTC hit a new high for the year. Just a few hours ago during Asian trading Bitcoin touched $8,320 adding over 5 percent on the day.
Daily volume is still holding record levels at over $30 billion and the parabola has extended on Bitcoin charts. It has even become something of a joke on crypto twitter;
Guys I hate to break it to you but the #bitcoin parabola is simply out of room.
We’re going to have to attempt a warp jump through space and time to continue this.
Target $20k+, February 2019. pic.twitter.com/Vt9ppMTDEU
— Moon Overlord (@MoonOverlord) May 16, 2019
As we know from previous market cycles this action cannot be sustained and Bitcoin will fall back, guaranteed. When it does there will be an influx of buyers loading up on what could be its lowest price for quite a while.
During the bull run of 2017 Bitcoin pulled back and tested the longer term moving averages several times. Long term trader ‘CryptoFibonacci’ has charted this showing the points where BTC returned to support at the MA levels; “Things will retrace and test the moving averages. Count on it!”
$BTC Daily moving average Chart.
Things will retrace and test the moving averages. Count on it!#BTC #bitcoin pic.twitter.com/9uXf1huLdR
— CryptoFibonacci (@CryptoFib) May 16, 2019
Looking at the chart it is clear that a pullback from current levels will send Bitcoin back to around $6,400 on shorter term moving averages. If BTC retraces to longer term support zones it could go all the way back down to $5,500 at the 50 day or even $4,300 again at the 200 day.
These will form new support and buying zones and, now that the uptrend has been established, could well send Bitcoin back up into five figures again before the end of the year.
CNBC, who have made a name as counter trade indicator for crypto, has called for a pullback as charts continue skywards reminiscent of December 2017. Anthony Grisanti of GRZ Energy told the outlet;
“We had rallied above [key resistance] but then failed on two different occasions, [Bitcoin] has doubled in the last five months, so I would expect a bit of a pullback, and on the downside, there’s a very interesting gap there, from $6,870 to $6,425.”
Renewed Optimism
The recent rally has renewed optimism and ‘hopium’ within the community with several big industry names have spoken out on Bitcoin’s movements and the end of the crypto winter. Gemini exchange co-founder Tyler Winklevoss stated;
“Bitcoin breaking 8k this time feels lot different than the last time. So much progress has been made since then and it’s only the bottom of the first inning!”
Bitcoin breaking 8k this time feels lot different than the last time. So much progress has been made since then and it’s only the bottom of the first inning! ??
— Tyler Winklevoss (@tylerwinklevoss) May 16, 2019
Market corrections are a natural thing and the number waiting for this one with fingers poised on the ‘buy’ button is growing.
Image from Shutterstock