Is The Bitcoin Rally Already Over Not Even Close

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Is The Bitcoin Rally Already Over? Not Even Close

A Function Of Healthy Market Mechanics

After surging more than 40% over the last two months Bitcoin prices are falling back. The move has now reached the -11% level and threatens to take BTC prices even lower. The good news is that lower prices are not likely, not right now. A look at the charts should be all it takes to get new bulls interested. The market, Bitcoin and the other major cryptocurrencies, is pulling back but to a support level consistent with a text-book buying opportunity.

That’s what I love about the cryptocurrency markets. Aside from supply and the cost of mining there really aren’t any fundamentals to drive the value. The market moves almost entirely on technical signals so, if you are patient enough to wait, clear signals always emerge. The problem for most, and I include myself in that because I can fall prey to the issue, is the cryptocurrency market is very long-term oriented. It can take a long time for those signals to play out.

Litecoin Is Leading The Market

Litecoin got a bit of news a few weeks ago when its mining level hit a new two-year low. While concerning, it is not surprising given the passage of LTC’s halveing-driven rally and a similar yet upcoming event for Bitcoin. In the time LTC’s hashrate hit a new low BTC’s hashrate has been moving up to new highs, go figure. Most recently, the LTC hashrate has been forming a bottom so there is some hope the mining community is still solid.

Regarding the rally, LTC/USD moved up more than 75% between December and January and is now in correction. Correction does not mean reversal even though this one has hit 20%. The 20% level usually indicates a bear market, it does not always indicate a major market reversal, and moves of this type aren’t that uncommon on crypto charts. More telling, the correction is finding support at the short-term 30-day EMA where the next rally is likely to form. The indicators are still bearish so I would expected support to be tested, if it is broken price action may move down to $48.

Bitcoin Set Up To Rally Once More, How High Can It Go

The Bitcoin chart is a near-replica of Litecoin’s. After moving up more than 40% the world’s most-important cryptocurrency has entered correction, fallen -11%, and finding support at the short-term EMA. The indicators are bearish suggesting some near-term weakness so caution is still warranted. Assuming a rally is about to form, the indicators are set up to fire a strong trend-following buy signal when prices begin moving up.

How Long Will the Market Downturn Last?

When will normality return? How long till global markets recover and bitcoin resumes the bull run it was teasing at before the coronavirus materialized? These are questions that all investors are pondering as the epidemic wreaks havok on gold, oil, stocks and – up until March 19 – on bitcoin itself. BTC is up 20% today, but there is still a long way to go before a full recovery is made. News.Bitcoin.com has asked several analysts when they believe this will occur.

Crypto Market Rallies Amid Corona Chaos

Crypto markets are back in the green on March 19, one week after bitcoin suffered its biggest one-day drop in seven years, tumbling over 50% to $3,700. “Bitcoin is uncorrelated [with traditional markets] over any time period other than 1-2 week “indiscriminate panic to cash” time,” noted Ryan Selkis.

On March 19 at 20:00 EST, BTC was up 14% for the day.

“Full recovery when?” many are asking. It’s hard to say for sure, but a guess can be hazarded. Since the Second World War, global bear markets have tended to last an average of 13 months, although a sustainable comeback in 2020 will depend very much on countering the coronavirus. Some economists suspect that a rebound will occur during the summer, when warming temperatures will potentially weaken the virus, while others think the misery will persist for the remainder of the year.

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Saga founder Ido Sadeh Man takes a measured view of where the global markets will go from here. “If you believe that the world as we know it ceases to exist any time soon, we can definitely expect an unprecedented rally in prices of crypto assets that are uncorrelated and independent of any existing financial infrastructures,” he told news.Bitcoin.com. “However, I am quite certain that the world is not about to end, and we can therefore expect people to look for diversification within known financial paradigms. This much is certain: as the world is changing, people are seeking stability above all.” He added:

Governments, through their central banks, are deploying unprecedented means of trying to stabilize and provide security to their citizens. However, these means are extremely dangerous and it remains uncertain whether they will indeed provide security or endanger the system as a whole because they’re taking place in an already-weakened global financial environment.

Man emphasizes the potential for individuals faced with 0% interest on the dollar to seek yield in crypto assets, including stablecoins to lock into lending protocols, and low volatility cryptos such as SGA . The multiple fiat-backed token, which mirrors the IMF’s SDR basket of five currencies, was added to Zengo’s noncustodial wallet this week, giving holders of the stablecoin a storage solution that isn’t reliant on private keys.

What Fiat Printing Means for Bitcoin

“Over the past two days, bitcoin and certain other coins have already started diverging from traditional markets,” observes Kronos CEO Jack Tan. “DASH, STEEM, and DATA all up a ton even as Asian and western equities are under sell pressure.” On the matter of quantitative easing, Tan ventures “The price impact from fundamental factors such as QE and negative rates will be seen maybe 6-12 months down the line. Certainly the expected impact on crypto from inflation and negative rates will help in the short term to support prices, but whether these catch on and instill confidence in the market remains to be seen.”

STEEM is up 40% on the news of a hard fork to move the Steemit community away from Justin Sun’s kingdom to a new blockchain.

Jack Tan remains bullish however in the mid to long term, predicting: “I believe bitcoin and a few other currencies will emerge stronger than ever after this stress test. However, it will take at least six months to see the true impact the virus has on global GDP, currencies and crypto. While we wait patiently for more signs of bullish divergence in crypto, I have an optimistic target of 30k on BTC for the end of 2020.” Mati Greenspan, founder of Quantum Economics, also believes that bitcoin could be in “full recovery within the next few months” provided efforts to contain covid-19 are constructive.

I can not express how bullish I am on bitcoin. We are at risk of losing the entire system right now. I know they will find a way to save it but all trust is lost.

Gold guys/girls – you’ll be fine too. It’s just that $BTC has bigger upside, by far but is riskier than gold

Given that bitcoin is fundamentally immune to the inflationary policies of the global financial system, it could be poised to capitalize on gross monetary mismanagement by actors such as the Fed, finally demonstrating its “sound money” credentials. Bitcoin advocates have long contended that the currency is a hedge against inflation and profligate financial institutions, rather than a safe haven from recession. Nobody can arbitrarily create more bitcoin and expand the supply.

As noted in the March 18 Marty’s Bent newsletter , bitcoin “is completely bereft of the debt handcuffs linked to the traditional financial system … Consistently producing blocks and enabling peer-to-peer transfers for those who have access to the software … This is the type of environment in which bitcoin was birthed. This is why bitcoin exists.” Castle Island Ventures’ Nic Carter also believes that “as long as people continue to crave a permissionless, globally-available, freely usable, always-on, never impaired alternative monetary system, bitcoin will continue to matter. Now more than ever.”

The volatility across assets is unreal right now – not even “safe havens” are immune

To get a sense of how drastic the vol in the treasury market has been this past week, 30-day annualized rolling vol for 20Y US treasury (TLT) index is higher today than bitcoin was a year ago�� https://t.co/kFFgGcJnDW pic.twitter.com/c99cy7QIPn

How Long Will the Downturn Affect Global Markets?

The current bear market took just 22 days to arrive, but it could take as long as 18 months before corona disruption fully abates, with the next three to four months set to be especially tough. The economic effects of coronavirus continue to reverberate, with global stocks plummeting despite major stimulus packages being announced. With many national governments taking the unprecedented step of writing blank checks to help businesses and workers navigate a coming recession, and the Fed slashing interest rates to near zero, it’s natural to wonder how much pain when the global markets will emerge from the wreckage.

Comments by UK Chancellor Rishi Sunak sum up the prevailing mood. At a news conference on March 17 he remarked, “Never in peacetime have we faced an economic fight like this.” Wildfires ignited by the covid-19 pandemic have scorched every part of the economy, hitting sectors such as aerospace, supply chain, housing and travel particularly hard. On the markets, even safe haven assets like gold and corporate bonds have taken a battering as traders wrestle with rising risk. Liquidity continues to dry up as companies draw down on credit lines.

On Tuesday, the U.S. Treasury announced a $1 trillion support package , with $250 billion provisioned for small businesses and $500 billion for individual aid via direct payments and tax cuts. The Fed also announced that it would bail out debt-burdened corporations by purchasing some of their loans. It’s 2009 all over again, the American Recovery and Reinvestment Act Part II.

The most pervasive thing about QE & bailouts (aka printing money) is that we won’t see their economic impact in years

As global debt intertwines, #Bitcoin becomes the hedge

It’ll also take years until its utility is widely accepted; but that’s something long term hodlers know: pic.twitter.com/w1mZJKHCFG

In the U.K., meanwhile, £350 billion has been earmarked for businesses, while in the EU, a €37 billion Corona Response Investment Initiative was proposed to complement member states’ own fiscal measures. The CRII fund will be made available to healthcare systems, SMEs, labor markets and other beleaguered parties.

Money printer goes
BRRRRRRRRRR#Bitcoin Goes
BRRRRrrr r r r r r

Fiat is infinite. #BTC only gets scarcer.

With a vaccine potentially 18 months away, flights grounded, borders closed and virus-suppressing, social distancing/home isolation measures in place, life has started to look very different for us all.

How long do you think the economic effects of coronavirus will last? Let us know in the comments section below.

Disclaimer: Price articles and market updates are intended for informational purposes only and should not be considered as trading advice. Neither Bitcoin.com nor the author is responsible for any losses or gains, as the ultimate decision to conduct a trade is made by the reader. Always remember that only those in possession of the private keys are in control of the “money.”

Images courtesy of Shutterstock.

Did you know you can verify any unconfirmed Bitcoin transaction with our Bitcoin Block Explorer tool ? Simply complete a Bitcoin address search to view it on the blockchain. Plus, visit our Bitcoin Charts to see what’s happening in the industry.

Bitcoin Is Bottoming, Right Now, It’s Time To Get In

It Looks Like Bitcoin Is Bottoming

After a long and protracted 3.5 month consolidation process it looks like Bitcoin is bottoming. The token fell to hit an almost four-month low over the weekend and has since bounced back. The bounce-back is not super strong, it didn’t form a double-digit percentage increase, but it doesn’t have to. Bitcoin is confirming support at an important price level and set up to rally.

Support is near the $7,800 level. This level was resistance in June and the location of an important technical consolidation. The consolidation formed during the summer rally, as the entire cryptomarket was getting a boost from the Litecoin Halving, and resulted in the July break-out and rally. This price level is important because it represents a shift of market sentiment. No longer are the 2020-Bears in control.

The weekly chart is still bearish. The indicators suggest selling may persist in the near term but there are caveats. Don’t get to bearish. Stochastic for one is already in oversold territory so it is unlikely price action will move much lower without a break-down of BTC fundamentals. Momentum is likewise bearish but weak and not suggestive of market conviction. If price action were to fall it would take a significant amount of work on the bears part and, if successful, would result in a sharp decline possibly as low $6,000.

In terms of fundamentals, Bitcoin’s hashrate and dominance continue to trend skyward. Dominance is hanging around 67% to 70% right now while the hashrate is hanging just under a very-recently set all-time high. These metrics are indicative of a market gearing up for next year’s Halving, an event I expect will drive BTC to a new all-time high. Until then, traders should keep a close eye on today’s support levels because it could be the starting point for the Halving-Rally.

If prices move higher as I suspect they will the first target for resistance is the short-term moving average. Once price action moves above the EMA a move up to the top of the narrowing consolidation range near $9,500 is probable. Once price action breaks out of the triangle pattern a new rally will be able to start and it may drive prices up to $13,000 by the end of the year.

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