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Ongoing Bitcoin Rally Throws A Wrench Into Long-Standing Chart
Many have welcomed the recent rally with open arms, as it allowed Bitcoin (BTC) to surpass key resistance levels in the $4,000 region. However, this move, which caught many traders with their pants down, throws a massive wrench into one of the most famous charts in this industry, which depicts the lead cryptocurrency following a predictable chart that could theoretically be stretched out into infinity.
As seen below, BTC has long followed a cycle of booms and busts, rallying to new highs, pulling back, before doing the same all over again. In fact, for its whole life as a tradable, liquid asset, Bitcoin’s approximate price action could be somewhat charted in advance. But, BTC’s recent foray past $5,000 quashes this cycle, as BTC is now not following its parabolic trend no longer.
If these deviance corrects itself, Bitcoin could very well revisit its lows, and even potentially establish new ones.
The recent breakout if sustained would be one of the largest deviations from long-term trend.
— throwaway (@throwaway82738) April 6, 2019
Look to Nov. dump for an example of deviance. That black line is a magnet. @kenoshaking @MustStopMurad @woonomic pic.twitter.com/5RzOmKMJ1s
No matter where Bitcoin ends up finding a long-term floor, Josh Rager of Level recently explained that if history repeats itself and trends are upheld, it is well too early for BTC to rally and break out of an accumulation range. He explains that the accumulation period in 2015 lasted 216 days. If BTC continues higher at current, the accumulation period would only have lasted half that time.
$BTC Accumulation Pattern
— Josh Rager 📈 (@Josh_Rager) April 5, 2019
It took Bitcoin 216 days for accumulation from bottom to spring in 2015
If this were accumulation, this week's $1000 candle would be the exact middle of 216 accumulation days and would end on July 19th, 2019
Pure speculation but fun to compare pic.twitter.com/I6YfHiqwdW
These two analyses in tandem paint the picture that Bitcoin could not only revisit lows, but that it could also trade in a tight range for the coming three or four months.
Could Bitcoin Continue To Deviate?
The fact of the matter is, the conditions, both in the cryptocurrency industry and the macroeconomy, are drastically different than 2014 to 2016, when all was fine and dandy on the global stage. Some now argue that it is nonsensical for BTC to continue to follow patterns established during a different backdrop, as the “perfect storm” has arrived to allow for Bitcoin to take the stage.
Brendan Bernstein, the founding partner of Tetras Capital, an industry investment firm whose partners seem skeptical of Ethereum, recently laid out why he believes BTC’s long-term prospects are healthy. Bernstein looked to the rise in democratic socialism, MMT, and Quantitative Easing, three macroeconomy policies that will likely boost the chances of hyperinflation and fiscal mismanagement, as to why BTC could see success. The Tetras representative also looked to the growing level of capital required to support baby boomers, the set-to-be tumultuous 2020 election cycle, and the impending 2020 halving as further factors as to why Bitcoin could see further adoption.
Theres a perfect storm for BTC right now
— Brendan Bernstein (@BMBernstein) March 29, 2019
– Democratic socialism
– MMT (Modern monopoly money theory)
– QE infinity
– 10k boomers retiring daily (entitlements skyrocketing)
– 2020 election
– US interest expense > tax receipts by 2022
– BTC halving in 2020
Never been more bullish
All this has only been underscored by the fact that the technology underpinning this whole embryonic industry is unparalleled. The Lightning Network, Bitcoin’s current best chance at surmounting the benefits provided by classical payment rails, has exploded parabolically in recent months, meaning that mainstream adoption could just be on the horizon.
Photo by Chris Liverani on Unsplash