The second quarter of 2018 may bring some respite for the beleaguered bitcoin (BTC) bulls.
The world’s largest cryptocurrency by market valuation seems to have found a bottom around the $6,500 mark, having dropped 50 percent in the first quarter – notably, the worst Q1 performance on record and the second worst ever.
Soon before press time, BTC had made a minor spike to over $6,950 – having been languishing around $6,800 for some time.
Over the last week, though, the bulls have been struggling to find their feet as indicated by stagnant prices and a narrowing price range.
Yet, speculation is doing the rounds that big Wall Street names (such as Soros and Rockefeller) are set to enter the crypto space. If confirmed, the news could ramp up the bull case, as happened with the advent of bitcoin futures soon before bitcoin’s December price peak.
Further, the historical data shows bitcoin tends to perform well in the second quarter.
- BTC has registered gains in the second quarter every year – the highest being 1,964 percent in the Q2 2011 when bitcoin jumped from $0.78 to $16.1.
- The 131 percent gain reported in Q2 2017 is the second highest on record.
The odds of bitcoin repeating the historical pattern this year are high, as the cryptocurrency is currently oversold, according to the 14-day relative strength index (RSI).
Further, the bullish argument put forward by historical data adds credence to CoinDesk’s view that the much-feared “death cross” (50-day and 200-day moving average (MA) bearish crossover) could be a “bear trap.”
Additionally, the weekly chart does show a potential for a minor corrective rally.
Weekly chart
The above chart (prices as per Bitfinex) shows, for the third straight week, the ascending 50-week MA is capping the downside in BTC. This, coupled with the basing pattern around $6,500, as seen on the daily chart (not shown), indicates that bitcoin could soon test resistance lined up around $7,500.
A convincing move above $7,500 could yield a rally to the descending (bear-biased) 10-week MA, currently located at $8,605.
However, in the larger scheme of things, only a close above $11,700 would signal a bearish-to-bullish trend change.
Spinning top image via Shutterstock
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