But one trader is less optimistic. Posting their analysis on TradingView, they warn that bitcoin is still in a bear market and may suffer a “violent” correction back to $3,000.
“I’m becoming increasingly convinced that the bear market is not over, and that this is a bear market rally… I think as soon as we roll over, it’s going to be very violent. In fact, I think it could be so violent, that we test or surpass the December low.”
The trader, who goes by the bizarre pseudonym MagicPoopCanon, is bullish on bitcoin long-term, but believes a severe correction is coming.
Their view is rooted in bitcoin’s ten-year logarithmic chart which follows a predictable linear curve.
Bitcoin, they claim, must retrace to the blue line before the true bottom is formed.
“In every bear market Bitcoin has ever had, it has touched the bottom of the blue arch before the next bull market began.”
If their analysis is correct, bitcoin would likely reverse to $3,000 sometime around October, 2019.
“I don’t really think we will dip below 3000, but it is definitely possible. Especially since the bottom of the arch is still well below 3000.”
The trader also points to bitcoin’s ‘Network Value to Transactions’ (NVT) indicator which is flashing red.
The NVT is a bitcoin-specific indicator that tracks blockchain data flows. While the indicator is somewhat controversial, it has been widely used to predict tops and subsequent selloffs in the market.
“Literally every signal was a success. EVERY SIGNAL. Now, it’s flashing a powerful sell signal. Each time we had a weekly sell signal in the past, the market fell at least to the 61.8% retrace.”
The trader’s hypothesis flies in the face of most recent technical analysis. Trader and analyst Willy Woo recently calculated a 95 percent chance the bitcoin bottom is already in. Galaxy Digital’s Mike Novogratz is 85 percent sure.
Even a bitcoin-sceptic looked at the charts on CNBC yesterday and admitted it goes higher from here. Technical analyst Peter Brandt, however, is on the fence, saying there’s a 25 percent chance bitcoin goes to zero. But his more likely bet is a rise to $50k.
Bitcoin is still in a nascent stage, so drawing conclusions from technical analysis is far from conclusive. But if the trader’s prediction of $3,000 is correct, we’re in for a violent 65 correction ahead.
This article was edited by Samburaj Das.
Last modified: May 29, 2019 09:18 UTC