Crypto Analysis | Has The Bear Market Just Ended?!
Good day Hiveians!
Join me in analyzing the crypto markets!
You must have thought you read the title wrong
But no, I am really pondering: Has the Bear Market just ended with Bitcoin dropping sub 23k, rather than started?
Surely such a statement needs clarification, so we are going to make it the topic of this post!
Some time ago I noticed that we can draw a trend line from the lows of the previous market movements on the monthly chart for Bitcoin which very accurately predicted the low of the final Bear Market drop. It is quite remarkable:
You will notice one difference for this cycle, however: We have a long wick down to $3000 for the March 2020 crash. This is one caveat of this argument. But if we stick with the monthly candles, the low for this bear market is at about $21.5k. There is a second thinner trend line in the chart which accounts for the weekly chart and has a low of about $14k. However all cycles did not go under the high of the previous cycle which is at around $20k. This is why the $20-22k looks very reasonable to me.
But there is more. When we look at the RSI, we can see that all bear markets reaches a value of about 44. With the drop of today we are under this value. We still have to see where it closes. But it is safe so say that we have reached this value. This indicator has so far worked surprisingly well and I think it is a strong clue that a bottom might be in soon (or has with currently $22.6k). Bitcoin has then stayed at an RSI below about 51 for several months. The longest being 487 days. In 2018/9, it was only half a year, however.
In the previous post I argued that we would be in a bear market for at least another half a year. And because until now we always had bear rallies I thought that a recovery to about $40k was likely. Here is the chart again:
Not having had a bear rally for such a long time (12 weeks+) is highly unusual. There was always the option of going straight dwon to ~22 which I wrote about last time:
Alternatively, we are heading straight down to about 20-22k!
With this now happening, I think there is an actual possibility to having a premature end of the bear market, just like we had a premature end of the bull market. This is obviously speculative, but I honestly think that people are overestimating the lows for Bitcoin at the moment. Especially with the Bitcoin Doubling curve being over $30k right now (which @edicted often points out).
If I say the bear market ended, it does not mean that we will have an instant rally!
Rather, normally when we have the last crash of a bear market, there is a long sideways movement of several months (even up to half a year). Could this be happening? Or am I simply in the denial stage? :)
Were are you in this chart?
As a general reminder: Please keep in mind that none of this is official investment advice! Crypto trading entails a great deal of risk; never spend money that you can't afford to lose!
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