Bitcoin (BTC) is currently trading at around $7,758 following a 3% jump in price since Monday.
However, over the past 24 hours, the price of BTC has dropped by 2%.
As we move into 2020, Bitcoin seems to be consolidating above its 20-day EMA. Following some positive price action earlier in the week, some are suggesting that the bear market may be over and Bitcoin will push higher again.
Let’s take a look at Bitcoin’s chart, courtesy of TradingView.
As you can see, Bitcoin has finally crossed its 20-day EMA and even managed to push past its 50-day EMA over the last few days. These are the crucial initial steps BTC must take if it is to start recording higher lows.
At the time of writing, BTC is moving to the downside after bouncing off its 200-day EMA, and has now dropped back below the 50-day EMA as well.
Over the last quarter of 2019, volume was also showing signs of weakness. During most of Q4, volume stayed below $20 billion.
However, since late December, Bitcoin seems to have been turning things around. After the last drop that took BTC from around $7,500 to $6,900, price bounced and started climbing upwards.
If Bitcoin is able to maintain the positive trend seen earlier in the week, we might see $10,000 sooner than expected.
The current Bitcoin trend
Last week, I underlined that within the next few days/weeks, we could see a major reversal after a period of serious accumulation by ‘hodlers’.
Volume has remained similar to last week, about 30% to 40% above last month. This means the accumulation cycle could be close to an end and the bull run we’re all waiting for will start sooner than expected.
For the time being though, there’s a chance it can go either way. Only if BTC continues to add higher lows will price continue to go up.
The upwards movement over the past few days could mean a shift in sentiment, but it is too early to tell. It seems we already found the bottom (during 2019) and could be making our way towards a mid-term move to the upside.
I expect price to bounce between the 20-day and 50-day EMAs until we see a serious break to the upside. At the moment, I expect BTC to trade between $7,500 and $8,000, as there’s strong resistance around this key level.
To break the 50-day and 200-day EMAs, BTC will have to go past some serious volume levels. I personally see massive resistance at around $8,000 and again near $10,000.
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 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 that the Bitcoin halving is coming in May 2020, which will put extra positive pressure on price as the number of Bitcoin minted per block is halved.
The key aspect of the halving event is to work out whether it has already been priced-in by miners. I personally doubt it, since most people (and businesses) have a short-term mindset.
In addition, miners’ behaviour shows there’s additional specialisation with better hardware being developed and released. Not only would that make the hash rate go up, it would also diminish profitability for the entire mining space.
Therefore, I see miners pushing for lower prices until the halving takes place. The harder it is to mine until the halving, the more miners will drop off, leaving more room for profits for the players who stay.
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.
Safe trades!
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About Bitcoin
In August 2008, the domain name bitcoin.org was registered. On 31st October 2008, a paper was published called “Bitcoin: A Peer-to-Peer Electronic Cash System”. This was authored by Satoshi Nakamoto, the inventor of Bitcoin. To date, no one knows who this person, or people, are.
The paper outlined a method of using a P2P network for electronic transactions without “relying on trust”. On 3rd January 2009, the Bitcoin network came into existence. Nakamoto mined block number “0” (or the “genesis block”), which had a reward of 50 Bitcoins.
More Bitcoin news and information
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Disclaimer: The views and opinions expressed by the author should not be considered as financial advice.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.