Topic: Technical and fundamental analysis of the new upward trend in Bitcoin market (Read 157 times)
April 25, 2018, 04:55:28 AM
I expected at least one comment. Is the text too hard for reading, not articulate enough?
April 24, 2018, 08:59:14 AM
So, the bull market is back and we are all very optimistic again.
Here I will try to do a bit of a trend analysis.
Let me just mention that most of the graphs were not made by me, but rather collected from other sources.
First of all, the question is whether we are in a bull run, bull trap, or a period with a double bottom.
1st, a bull trap
Let's take a look at this graph:
A bull trap would require one of the followin two things:
1. A nonsignificant price move or a move with low volume.
If you look at where I have put a purple line, it is where the upward trend started. If we consider it is a run from 6.838 USD to 9.310 USD, which makes 27%, I would not say it is insignificant, especially if we take a look at the rise of the volume.
2. A trap inside a trend shape.
If we look at Bitcoin price chart it doesn't say much, but maybe a market capitalization chart (blue line) can help here. We shouldn't really look at market cap, but it is only mathematics (total number of coins multiplied with price), and since it makes it easier to notice certain movements, then why not? Look at around 19th of March. There was an obvious bull trap. An uphill movement that stopped abruptly, after which a previous downward trend continued. This time the line broke the previous bull trap resistance point, and with large volume. Also, there was something similar to a short-term W double bottom shape forming (black and red circles), but the upper resistance has been broken here to.
2nd, a double bottom
Some people say we had could see a new bottom around June by looking at the charts from the previous years.
I totally agree with them that we should look at the previous charts. If anything is obvious with Bitcoin, it is that previous movements are repeating themselves.
Look at this graph:
The bottoms are repeating themselves with 2 months difference between them.
But look at the first graph again (Bitcoin graph from point 1).
We actually had a bottom after 5th of February. Then we had a top on 5th of March and straight downfall from there. We haven't reached a previous bottom, but we did find ourselves around there, and when? Around 5th of April. Hence 2 months difference. This is why I think we already had our double bottom and can expect the upward trend to continue from here.
Enough of techical analysis, let's go to fundamental.
Take a look at this interesting article, with which I totally agree by the way:
https://www.cnbc.com/2018/02/23/bitcoin-ethereum-other-cryptocurrency-five-positive-factors-for-2018.html
1. Point 1 - problem with high fees and scalability will be solved with Lightning network. Maybe. I don't trade Bitcoin, so I cannot verify this, but with SegWit adoption Bitcoin transactions already became really cheap: https://blockchain.info/tx/92785a57f6e9e9eb9d37a00e6e8be7f888376f65fa2b8f868db261cbf6cca7b0
That is move of 450 millions for 1.09$.
I borrowed this fact from stompix, thank you stompix.
2. & 3. Legitimate ICO's and regulation. Should we talk about regulation again? There is so much FUD over regulation and I will only repeat that the regulation is a good thing, especially as crypto world is really most of all lacking security. Regulation shouldn't be mistaken for prohibition.
Bolt Brownie has a nice topic about fighting the FUD with dividing news to actually bad and positive... Everything else is just noise.
Also most of the weak projects got shut down during the downward trend.
Regulation opens up space for point 5. and we could have already seen some news in this field too:
"Earlier this month, CCN reported that some of the largest institutional investors in the finance market including $8 billionaire George Soros, Rockefeller family’s venture capital fund VenRock, and the Rothschild have entered the cryptocurrency market.
The majority of investors were skeptical towards these investors entering the market when it has experienced one of the worst corrections in its history. But, historically, investors like Soros have tended to invest large sums of money in markets that are significantly down from their all-time highs, taking advantage of the downward trend."
Taken from this article: https://www.ccn.com/bitcoin-price-breaks-8000-for-first-time-since-march-real-momentum/
If we think about the fact that those people are so highly infulential that some of the conspiracty theoreticists consider them a part of the secret group controling the world by controlling the world's finances, then it should be enough to notice an obvious importance of this news.
Point 5. paves the way for point 4 - adoption. I really think that with regulation, funding and improved scalability we will see more and more traders accepting Bitcoin (and other cryptocurrencies as well).
Let's go further. There are other interesting theories around, for example I borrowed this one from jaysabi.
According to a recent article on CNBC, Tom Lee is attributing the current price weakness to selling by American consumers and crypto exchanges to satisfy tax liabilities. At least this is an interesting theory, but keep in mind he's only speculating like everyone else.
https://www.cnbc.com/2018/04/05/wall-streets-tom-lee-predicts-massive-outflow-from-cryptocurrencies-ahead-of-tax-day.html
Key (speculative) points from Lee:
U.S. households likely owe $25 billion in capital gains taxes for their cryptocurrency holdings
Additional selling pressure by crypto exchanges sitting on over a billion dollars in profit denominated in btc/eth and are converting to USD to satisfy tax obligations
tax-related selling represents a massive outflow from crypto to USD and historical estimates are each $1 of USD outflow is $20-$25 impact on crypto market value
Expects btc to find footing after April 17
Expects btc to reach $20,000 by mid-year and $25,000 by year-end
This run is also over and supported by some facts.
Then you have signals like this one:
https://www.ccn.com/cryptocurrency-market-will-get-much-bigger-former-jpmorgan-banker/
Are you still afraid of those big institutions that could prevent a crypto revolution from happening? Maybe it is an isolated case, but if a person that "used to work" for such an important part of the system speaks like this about the cryptocurrency market right after he became free to speak....
Next one.
People were very discouraged by the 75% fall of the market.
Take a look at this fellow:
Should I say more?
Let's go further. People make an argument that it is not the same to fall 75% with a small market or big market. Might be true. But then let's just take absolute values into account, let's take a look where we were just one year ago:
At the moment of the lowest dip, Bitcoin was at around 6.800 USD. Altcoins were similarly ahead of past times.
What about the rest of the market?
Take a look at the global chart:
I think it looks fairly similar to that of Bitcoin.
We also have an (expected) announcement on more exchanges accepting fiat money, starting with Binance:
https://dailyhodl.com/2018/04/19/binance-announces-fiat-to-crypto-trading-pairs-in-a-move-that-could-shift-reliance-away-from-bitcoin/
This will obviously shift more attention towards Bitcoin. Most of the altcoins followed Bitcoin since everything was converted to Bitcoin, more or less.
What is the most negative thing about Bitcoin that can hurt it if compared to some other projects? The one it was created to fight against in the first place - centralization.
https://www.ccn.com/the-dangerous-threat-of-centralization-that-exists-in-the-blockchain-ecosystem/
A small % of the society holds most of the coins, just like with fiat money, it is easy for speculators to influence the price etc. It's not that other projects don't have similar problems. Look at the new story about master nodes. While the idea is great, it will only provide those with lots of money with more money (in order to earn you have to already hold an almost impossibly significant amount of coins/tokens).
Here I will try to do a bit of a trend analysis.
Let me just mention that most of the graphs were not made by me, but rather collected from other sources.
First of all, the question is whether we are in a bull run, bull trap, or a period with a double bottom.
1st, a bull trap
Let's take a look at this graph:
A bull trap would require one of the followin two things:
1. A nonsignificant price move or a move with low volume.
If you look at where I have put a purple line, it is where the upward trend started. If we consider it is a run from 6.838 USD to 9.310 USD, which makes 27%, I would not say it is insignificant, especially if we take a look at the rise of the volume.
2. A trap inside a trend shape.
If we look at Bitcoin price chart it doesn't say much, but maybe a market capitalization chart (blue line) can help here. We shouldn't really look at market cap, but it is only mathematics (total number of coins multiplied with price), and since it makes it easier to notice certain movements, then why not? Look at around 19th of March. There was an obvious bull trap. An uphill movement that stopped abruptly, after which a previous downward trend continued. This time the line broke the previous bull trap resistance point, and with large volume. Also, there was something similar to a short-term W double bottom shape forming (black and red circles), but the upper resistance has been broken here to.
2nd, a double bottom
Some people say we had could see a new bottom around June by looking at the charts from the previous years.
I totally agree with them that we should look at the previous charts. If anything is obvious with Bitcoin, it is that previous movements are repeating themselves.
Look at this graph:
The bottoms are repeating themselves with 2 months difference between them.
But look at the first graph again (Bitcoin graph from point 1).
We actually had a bottom after 5th of February. Then we had a top on 5th of March and straight downfall from there. We haven't reached a previous bottom, but we did find ourselves around there, and when? Around 5th of April. Hence 2 months difference. This is why I think we already had our double bottom and can expect the upward trend to continue from here.
Enough of techical analysis, let's go to fundamental.
Take a look at this interesting article, with which I totally agree by the way:
https://www.cnbc.com/2018/02/23/bitcoin-ethereum-other-cryptocurrency-five-positive-factors-for-2018.html
1. Point 1 - problem with high fees and scalability will be solved with Lightning network. Maybe. I don't trade Bitcoin, so I cannot verify this, but with SegWit adoption Bitcoin transactions already became really cheap: https://blockchain.info/tx/92785a57f6e9e9eb9d37a00e6e8be7f888376f65fa2b8f868db261cbf6cca7b0
That is move of 450 millions for 1.09$.
I borrowed this fact from stompix, thank you stompix.
2. & 3. Legitimate ICO's and regulation. Should we talk about regulation again? There is so much FUD over regulation and I will only repeat that the regulation is a good thing, especially as crypto world is really most of all lacking security. Regulation shouldn't be mistaken for prohibition.
Bolt Brownie has a nice topic about fighting the FUD with dividing news to actually bad and positive... Everything else is just noise.
Also most of the weak projects got shut down during the downward trend.
Regulation opens up space for point 5. and we could have already seen some news in this field too:
"Earlier this month, CCN reported that some of the largest institutional investors in the finance market including $8 billionaire George Soros, Rockefeller family’s venture capital fund VenRock, and the Rothschild have entered the cryptocurrency market.
The majority of investors were skeptical towards these investors entering the market when it has experienced one of the worst corrections in its history. But, historically, investors like Soros have tended to invest large sums of money in markets that are significantly down from their all-time highs, taking advantage of the downward trend."
Taken from this article: https://www.ccn.com/bitcoin-price-breaks-8000-for-first-time-since-march-real-momentum/
If we think about the fact that those people are so highly infulential that some of the conspiracty theoreticists consider them a part of the secret group controling the world by controlling the world's finances, then it should be enough to notice an obvious importance of this news.
Point 5. paves the way for point 4 - adoption. I really think that with regulation, funding and improved scalability we will see more and more traders accepting Bitcoin (and other cryptocurrencies as well).
Let's go further. There are other interesting theories around, for example I borrowed this one from jaysabi.
According to a recent article on CNBC, Tom Lee is attributing the current price weakness to selling by American consumers and crypto exchanges to satisfy tax liabilities. At least this is an interesting theory, but keep in mind he's only speculating like everyone else.
https://www.cnbc.com/2018/04/05/wall-streets-tom-lee-predicts-massive-outflow-from-cryptocurrencies-ahead-of-tax-day.html
Key (speculative) points from Lee:
U.S. households likely owe $25 billion in capital gains taxes for their cryptocurrency holdings
Additional selling pressure by crypto exchanges sitting on over a billion dollars in profit denominated in btc/eth and are converting to USD to satisfy tax obligations
tax-related selling represents a massive outflow from crypto to USD and historical estimates are each $1 of USD outflow is $20-$25 impact on crypto market value
Expects btc to find footing after April 17
Expects btc to reach $20,000 by mid-year and $25,000 by year-end
This run is also over and supported by some facts.
Then you have signals like this one:
https://www.ccn.com/cryptocurrency-market-will-get-much-bigger-former-jpmorgan-banker/
Are you still afraid of those big institutions that could prevent a crypto revolution from happening? Maybe it is an isolated case, but if a person that "used to work" for such an important part of the system speaks like this about the cryptocurrency market right after he became free to speak....
Next one.
People were very discouraged by the 75% fall of the market.
Take a look at this fellow:
Should I say more?
Let's go further. People make an argument that it is not the same to fall 75% with a small market or big market. Might be true. But then let's just take absolute values into account, let's take a look where we were just one year ago:
At the moment of the lowest dip, Bitcoin was at around 6.800 USD. Altcoins were similarly ahead of past times.
What about the rest of the market?
Take a look at the global chart:
I think it looks fairly similar to that of Bitcoin.
We also have an (expected) announcement on more exchanges accepting fiat money, starting with Binance:
https://dailyhodl.com/2018/04/19/binance-announces-fiat-to-crypto-trading-pairs-in-a-move-that-could-shift-reliance-away-from-bitcoin/
This will obviously shift more attention towards Bitcoin. Most of the altcoins followed Bitcoin since everything was converted to Bitcoin, more or less.
What is the most negative thing about Bitcoin that can hurt it if compared to some other projects? The one it was created to fight against in the first place - centralization.
https://www.ccn.com/the-dangerous-threat-of-centralization-that-exists-in-the-blockchain-ecosystem/
A small % of the society holds most of the coins, just like with fiat money, it is easy for speculators to influence the price etc. It's not that other projects don't have similar problems. Look at the new story about master nodes. While the idea is great, it will only provide those with lots of money with more money (in order to earn you have to already hold an almost impossibly significant amount of coins/tokens).
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