The Bitcoin Market Is Breaking Down
The Bitcoin market did not rally from the $9,000 level as expected. On the contrary, the world’s leading cryptocurrency broke through support and looks like it could take another plunge. The token is undergoing an intense round of profit taking that, I think, is lingering HODL’rs leftover from the 2017/2018 rally getting out as quick as they can. I don’t blame them. I too have some positions leftover from that time period that I would like to get out of, the difference is I am content to wait for the big money I know is on the way.
When I say big money I mean at least a retest of the all-time high for Bitcoin and most other major cryptocurrencies. There are a number of catalysts that will drive these highs, the only question is when they will materialize. The one I know for certain is coming and the exact date it will happen is the Bitcoin halvening. The halving is scheduled for May 14 2020 at block number and will greatly reduce the number of available BTCs coming from the mining community.
If you doubt the power of the halving on BTC prices take a look at this chart, it compares BTC’s performance YTD with that of LTC and ETH. LTC underwent a halving, ETH did not, and it is clear in the chart that LTC outperformed all major markets. Next spring, when BTC halves, there will be a pre-halving rally the likes of which we’ve never seen. Two factors that underscore my point are BTC hash rate and dominance, both of which just hit new all-time highs. This shows more miners are working harder than every before to get a piece of Bitcoin BEFORE the halving. Holders mean supply is limited, increased difficulty means value goes up, the combination equals rally.
Until then, traders are cautioned to avoid overly bullish trades until a clear entry signal is given. Until that happens, traders should be looking for support targets that are the likely targets for the aforementioned entry signals. My targets are $7,800, $6,100, and $5,000. The BTC/USD is currently sitting on $7,800 but price action is bearish. A bear flag is forming so I don’t expect it to hold. A fall below $7,800 is likely to go to $6,100. If I’m wrong and support at this level holds, a move up to retest $9,400 is the most probable scenario.