The Bitcoin price initiated one of the biggest upward moves in history on October 25, but it has been decreasing since. This has caused a bearish sentiment to set in, with many calling for a continued decrease.
While the long-term outlook looks bearish, the Bitcoin price has shown some strength in the medium-term — possibly suggesting that an upward move will begin soon. Additionally, the proximity to the BTC block reward halving cancels out some of the long-term bearishness.
Even though the technical outlook looks bearish, the network’s metrics give a more positive outlook. A total of 11 million Bitcoin have not moved at all during the past year — indicating that long-term holders did not sell at the bottom nor at the high.
Trader and technical analyst @rektcapital noted how bearish Bitcoin‘s weekly chart looks. In it, we have fallen below a significant support area and afterward validated it as resistance.
Closed within the green box on the Monthly – something it had to avoid to retain bullish momentum
The Range Low (~$7750) has since flipped into a resistance (confirmed on the 1D) which means a revisit of upper $6000s remains a possibility for $BTCUSD#Crypto pic.twitter.com/VnZjyz2HIQ
— Rekt Capital (@rektcapital) December 2, 2019
He suggests that $6000 is a possibility since the Bitcoin price has failed to reclaim the previous support area. Let’s take a closer look at the price movement and see if such a drop is likely.
Long-Term Bitcoin Chart
A look at the weekly chart shows that the Bitcoin price is trading inside of a descending channel. The $7500 area has offered support on three occasions — in May, June, and October. However, the price fell below two weeks ago.
Last week’s increase failed to reach a close above this area and the Bitcoin price has now validated it as support. This is further solidified by the presence of the 100-week moving average (MA) — which is also offering resistance to the price.
A similar sentiment is given by full-time trader @cryptoMichNL who is looking at the same descending channel and suggests that we might make a slightly lower low — but the bottom should be near. He also suggests that the upcoming halving could have a positive effect on Bitcoin’s price.
I don't think we're going that much further down. Yes, we might see another wick below the golden ratio of Fibonacci (in the green support area).
However, given the halving coming up, I'd think we rather start rallying than continuing the drop. pic.twitter.com/arXoiPRNyq
— Crypto Michaël (@CryptoMichNL) December 2, 2019
The Bitcoin price has been trading inside a descending channel since June 24.
There is a strong bullish divergence present in both the RSI & the MACD. We can see that the current rally began on November 25. From here, according to the daily chart, we will either immediately move upward or make a slightly lower low then continue to move upward.
As for the halving, we can see that the Bitcoin price has historically rallied pre-halving (vertical lines).
If the Bitcoin price were to continue a similar movement, it would increase gradually until the next halving in May 2020. Also, since the support line is currently below the price, it allows for the possibility of another drop before we begin a gradual increase.
To conclude, the Bitcoin price recently broke down below a significant support area and validated it as resistance. However, the daily outlook shows that the price has been gaining strength and will possibly move upward — a scenario supported by historical halving movements. It is possible that the Bitcoin price does one final downward move before beginning a gradual acceleration.
Disclaimer: This article is not trading advice and should not be construed as such. Always consult a trained financial professional before investing in cryptocurrencies, as the market is particularly volatile.
Images courtesy of Shutterstock, TradingView.
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Source: Be In Crypto