Disclaimer: This article is not intended as an investment advice and published for educational purposes only. BTC markets are highly volatile and risky in nature. DYOR before making any investment decision rather than listening to a stranger over the Internet.
Bitcoin is still in a downtrend and analysts are raising questions over its entire existence. While some of the big names are rejoicing because their warnings about Bitcoin have come true, the other side remains un-flinched with this draw down in prices and remain hopeful. Whenever Bitcoin loses value or achieves a parabolic return, the analysts who predicted correctly come out of their shells with “I told you so” narrative and start calling out the opposing side. While so-called anonymous Twitter “analysts” have mastered in tweeting several possible outcomes and when one of them comes true, they’ll dig in their tweet history and retweet that one and tell people they got it right.
While people like Jamie Dimon remain skeptical about Bitcoin and go as far as calling it a scam, there are other analysts like Tim Draper and Thomas Lee who remain hopeful and expect the bear market to end and BTC to achieve its highs soon. John McAfee even tweeted that BTC will be worth 1 Million USD by 2020. I believe both sides are living at one extreme and not to pay much attention to either side, we need to read between the lines to make informed and unbiased decisions.
I do not believe as John McAfee that BTC is going to one million USD, I also do not believe that it is just going to zero and die. Due to its speculative nature and involvement of novice investors, the price will keep moving from one pendulum greed to the other pendulum, fear. The small size of the entire market also makes it easier to manipulate if key players want to move the market in the desired direction.
In this article, we will try to speculate the potential bottom for the current bear market where BTC can stop going lower and turn the tides. Due to the most recent sell-off and Bitcoin losing its key $6,000 support level (a level which held BTC since Feb 2018), it is not looking very promising for BTC in the medium term. The 2018 bear market can extend longer and could go well into the first half of 2019, mostly with low volatility and a lot of sideways movements unless a strong fundamental news comes out before and changes the narrative. There is a final deadline on 27th Feb 2019 for SEC to make a decision on VanEck-Solidex Bitcoin ETF. A positive outcome can work wonders for the market while as a negative outcome is unlikely to put too much pressure on the already beaten-up market.
There is certainly no one who can accurately predict where BTC can find its bottom. However, there are certain levels I am particularly interested to watch how BTC reacts when it reaches them.
$2,500-$3,000
This level is of interest due to several reasons. In 2014 bear market, BTC hit the ATH of $1,153 and started the downtrend. The bottom was found at $152, between 78.6% and 88.6% Fibs as illustrated.
If fractals play the same way in 2018-19, this bear market could find a potential bottom between 78.6% and 88.6% around $3,000 level within 2-4 months. But, owing to the market sentiment, I do not believe this level to be an absolute bottom at this stage, however; it can act as a launch pad of a bounce here. BTC has not retraced much ever since losing $6K and a bounce is likely overdue. If BTC keeps grinding lower without a larger pullback, a strong bounce off $3K-$2.5K remains a robust possibility. A review will be required once the price goes there.
BTC had also established history at those levels in June-July 2017. It spent almost 4 weeks going sideways only to break higher afterward. It retested $3K before continuing higher making it a tried and tested area and a potential strong support block.The 88.6% Fib (drawn from the 2015 lows of $152 to the ATH of $19,666) is also at$2,376, another level adding strength to the area.
$1,900
$1,900 is another minor support area after $3,000, a brief history was established in May 2017.
$1,150
If BTC fails to find a bottom at any of the above mentioned prices, then $1,150 is a strong support. It is the ATH of the 2013 bull run after which it started a downtrend,found a bottom at $152 and then broke above this ATH in April 2016.
BTC is at a critical point of its existence. There were several occasions when it faced some large draw downs and lost more than 80% of its value but remained resilient even after 10 years. Some analysts are calling this the end of BTC but only time will tell.
