Bitcoin (BTC) is currently trading at around $7,230 following a 3% drop in price since last week.
Over the past 24 hours, BTC hasn’t moved much.
BTC had broken most of its support levels during a huge sell-off in November and was falling further as we moved through December.
However, the world’s largest cryptocurrency found support near $6,600 and bounced back magnificently during the past week.
Will Bitcoin maintain its positive price action and end the year on a high?
Let’s take a look at Bitcoin’s chart, courtesy of TradingView.
Since the massive bull market that took Bitcoin close to $14,000 earlier in the year, BTC has been dropping in value following a downtrend that was only broken in late October when it surprisingly broke through a number of key resistance levels (around the 200-day, 50-day, and 20-day EMAs).
Bitcoin is still around 30% down from October’s high of $10,350 and close to 50% down from the yearly high in June.
In addition, BTC has broken below its 200-day EMA, and all its EMAs have now crossed to the downside – another bearish signal.
If the $6,700 level was to be broken, the next stop for BTC, if the volume profile is to be believed, is just above $5,000.
The current Bitcoin trend
At the time of writing, BTC is on an uncertain trend line even though the price hasn’t been able to break above the 20-day EMA. If Bitcoin is able to push past this level – at around $7,500 – we could see some serious price action to the upside.
Last week, I underlined that within the next three to five weeks, we could see a major reversal after a period of serious accumulation by ‘hodlers’. I’m personally expecting a big move either up or down soon.
Volume has remained similar to last week’s and is now up to $23 billion, 35% above last month’s. This means we could be starting to enter the end of the short-term accumulation cycle and price action could either pump or dump.
For the time being, as mentioned above, there’s a chance it can go either way. As long as price continues to record lower lows, that’s a bearish sign. I’m patiently waiting for a reversal signal.
For the time being, it seems we already found the 2019 bottom and could be making way for a mid-term move to the upside.
Will the trend reverse soon?
As veteran traders and investors usually say, smart money “buys when there’s blood on the streets”. I’ve been saying for the past month that I’m waiting for major drops to make new entries. Moments like these are highly welcomed and appreciated.
I strongly believe Bitcoin to be a long-term store of value, especially as traditional markets continue to show weaknesses.
How can the markets continue to push higher throughout the year after the ECB’s recent rate cuts, the continuous share buybacks from huge corporations, or the inverted bond yield shoving investors away towards riskier assets?
In addition, repo market activity – as in loans from central banks to commercial and investment banks – has spiked to new monthly records. That adds up to another signal of weakness for the general economy.
We shouldn’t forget the Bitcoin halving is coming in May 2020, which will put extra positive pressure on price, as the number of Bitcoin minted per block, halves.
In conclusion, investors and traders should pay attention to the overall economic panorama, as it will most likely be a major catalyst for worldwide BTC adoption.