Historical Bull Run Triggers
Bitcoin (BTC) may be a new paradigm in finance, technology, and human psychology, but its chart remains cyclical and rife with patterns, much like almost every other asset in circulation. And according to said patterns, Bitcoin is decidedly in an overall bullish trend. Let’s take a look.
Per Josh Olszewicz, an analyst at Brave New Coin, the 100 exponential moving average (EMA) and 100 daily moving average (SMA) on Bitcoin’s daily resolution has only crossed six times in BTC’s history as a liquid asset. Most recently, BTC’s 100 EMA has crossed above its 100 SMA, a “bull cross” according to Olszewicz. The last time this technical signal came to fruition (late-2015, pre bull run), BTC rallied parabolically in the months that followed, peaking at $20,000 as we know well know.
This isn’t the only signal that is accentuating that Bitcoin is decidedly bullish. Per previous reports from Ethereum World News, the Super Guppy, an indicator meant to determine trends and key levels, on the cryptocurrency’s three-day chart has flipped green. While this sounds like a random technical event, especially due to the fact that the Guppy isn’t a mainstream indicator, analyst Josh Rager suggests that this confirms the ongoing bull trend.
He adds that while the one-day iteration of this indicator can give “fake-outs”, the three-day Super Guppy is a great signal for analysts to determine trend continuations and dips to buy. Rager reminds his investors that the last time the three-day Guppy looked as it did now, a 25-month uptrend ensued, which brought Bitcoin from $200 to $20,000 in the now-historic move.
What’s more, Bitcoin recently closed its fourth consecutive weekly candle above its 50-week moving average, which was a sign seen during the earliest days of the previous bull run.
Susceptible To A Drawdown
The thing is, Bitcoin is still susceptible to a dramatic correction from here, despite the fact that the overall trend is surely bullish. In fact, the last time that the aforementioned technical signals were seen, BTC fell from its parabolic top, cooling off prior to resuming a massive run to the upside. And, believe it or not, a number of analysts are predicting this impending move.
Renowned analyst Peter Brandt, an investor who is about 50% sure Bitcoin will succeed over the long haul, notes that with this foray to near $9,000, Bitcoin has entered the “FOMO phase” of this ongoing parabolic advance. This suggests, for those unaware, that the advance may soon be reaching a local peak, meaning that a drawdown is in the cards. In fact, Brandt suggests that “once a majority of sold-out crypto bulls capitulate… a more sizable correction will likely occur.”
He isn’t the first to have suggested such a move is on the horizon. Trader Walter Wyckoff notes that throughout Bitcoin’s two historical cycles, BTC always rallied from lows to its 0.382 Fibonacci Retracement level from the last top, and then experienced a 40% correction prior to the next bull run. As it stands, the cryptocurrency’s 0.382 Fibonacci sits at $9,500, implying that BTC will soon enter that region, and then retrace 40% to $5,800.
Title Image Courtesy of Daniel Pascoa On Unsplash