Bitcoin managed to slightly touch the USD 19,000 mark on certain exchanges during midnight UTC. This pattern of increased volatility is something quite expected in the crypto realm. If we analyze the price of Bitcoin on a longer timeframe, we can see shocking revelations that hint back to the “rise and fall” of cryptocurrencies, which gave skeptics of blockchain technologies additional reasons to doubt and tout this market. How should traders proceed into today’s uncharted territories?
Bitcoin Price Analysis – A Strange Déjà vu?
Looking back at how prices behaved back in 2017, we witnessed a strong bull run that had little to no price adjustments. When Bitcoin became discussed on the mainstream media, your local taxi driver and barber became aware of this new technology and wanted to own it, without knowing anything about it. This quick rise soon came to an end within a few months, wiping out all gains made by new investors and traders who just entered the market. Usually, adjustments do occur from time to time, and it is very normal to witness a short term bear market or even a price consolidation. That was not the case back in 2017, and prices fell suddenly at the very start of 2018 to go back to normal levels.
This year, Bitcoin was moving in a very healthy uptrend contrary to 2017. But we notice in figure 1 that after the month of August, prices stopped adjusting and just went on a strong bull run.
This phenomenon is most probably due to several factors:
- US elections and geopolitics at play
- Uncertainty in the US stock market
- Financial institutions stacking up on cryptocurrencies
- More regulations and certified exchanges, paired with countries adoption
Though what’s mainly happening after August of this year, is that people are FOMO buying, especially after Bitcoin broke through important psychological price levels, specifically the USD 10,000 back in August.
Can Bitcoin Crash again back to USD 3,000?
It is very unlikely that Bitcoin crashes back down to that same level as it did back in 2018. One of the main reasons is that Bitcoin rose steadily and healthily this year. Advancements in the crypto realm paired with institutional adoption verify the long term importance of this technology.
Another important element is that the past hype that happened back in 2017 doesn’t exist as much today. In figure 2, we see the google trend chart showing an unnatural spike in Bitcoin searches, contrary to today’s normal search.
What to expect and how to be prepared
In order for the trend to steadily increase in value naturally, a price adjustment is overdue by now. Two case scenarios arise from the current situation:
- A price adjustment back to USD 16,000 levels
- A consolidation around USD 17,500
If prices continue to increase with no signs of retracement, a big adjustment is expected. Plotting the Fibonacci Retracements helps to identify key retracement areas.
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