In our Bitcoin forecast for 2019 we explained why we believe that Bitcoin’s path is higher, and that we continue to believe that the grand crypto bull market will continue. Moreover, in our 5 Must-Read Cryptocurrency Predictions For 2019 we laid out the fundamental drivers for this, one of which being institutional money entering the crypto market. In this article we focus on the shorter term, and we make the point that we believe Bitcoin (BTC) is about to start trending in the next 2 to 3 weeks, after a flat Bitcoin price in recent weeks and flat trading range in recent months.
The price of Bitcoin is flat as it can be. For 6 full weeks now it is trading in a tight range between $6100 and $6900. Moreover it is stuck in a wider range for 5 full months now. That’s very unusual for one of the most volatile assets in history. However, we forecast that Bitcoin will start a new trend within the next 2 to 3 weeks.
This article covers 3 different viewpoints why Bitcoin is likely to start trending in the next 2 to 3 weeks.
1. November has always been a great month for Bitcoin
Seasonality is the first viewpoint.
Note that seasonality is not a primary indicator, we consider it a secondary indicator.
Bitcoin has an impressive 100% result in closing the month of November higher than it opened in the last 5 years, since 2012. Below is the seasonality chart since 2015, and, separately, we researched the years prior. November has always been a great month for Bitcoin, December mostly but not always.
Why this is a critical piece of information is because, in chart-terms, any push higher from current levels will have a very bullish effect for Bitcoin’s trend. That’s because it will for the first time in 11 months create an event which we tend to call a ‘higher high’. Bitcoin bulls want to see a peak above $7500, preferably even above $8500, to have a confirmation of a new uptrend. If this were to happen it would be amazingly bullish for Bitcoin in the first place, and for the whole crypto market as well.
The opposite is true as well: any push lower will create a ‘breakdown’ in chart-terms. This would be concerning if Bitcoin’s price closes for 5 consecutive days below $6,000.
2. Historical data: Bitcoin’s flat range resolved to the upside
When we look back in time we see that Bitcoin has traded flat a number of times. It appears from those flat trading instances that Bitcoin has a track record of resolving flat trading ranges to the upside.
We have found several instances in the past 6 years in which Bitcoin was trading flat for a couple of months.
The most striking similarity is with 2015. That’s after Bitcoin peaked at $1174 in January of 2014, crashed throughout that year to $167, and it stabilized between $216 and $296 from Feb to Oct 2015 before it took off.
Note on this chart the false breakdown mid-August of 2015. This pattern has lots of similarities with 2018.
3. Nasdaq vs. Bitcoin
Another viewpoint is the correlation between Bitcoin and the Nasdaq index.
Both assets have been rising and falling in tandem in recent years. Only a minority of cases have shown a divergence, and they tended to last between 4 and 6 weeks.
So one way to look at this is trying to forecast where the Nasdaq is headed. Is the Nasdaq supportive of higher prices in November? Although there it lots of volatility in tech stocks right now the Nasdaq index is about to enter a major support zone. At the time of writing the Nasdaq trades at 6858 points while major support sits in the 6400 area. We don’t see a major crash right through this strong support, certainly not in the short term, because of the reasons we laid out in U.S. Stock Market Breaks Down In October 2018, How Low Can It Fall.
Intermarket dynamics support at a minimum a neutral month of November for the Nasdaq which is supportive for Bitcoin.
Bitcoin starts a new trend in the next 2 to 3 weeks
Bitcoin’s flat trading range for 5 full months is about to resolve. Our forecast is that Bitcoin will start a new trend within the next 3 to 4 weeks, somewhere in November of 2018.
Readers know by now that we are not perma bulls nor perma bears, not in crypto markets nor in any other market. We try to be as unbiased as possible.
Bitcoin can theoretically resolve down. That’s an option, but the above viewpoints, investigated as unbiased as possible, favor a resolution to the upside.
If and once an upward move this takes place it would confirm the grand crypto bull market is intact, because of the first ‘higher high’ on Bitcoin’s chart since it peaked on December 17th 2017. Presumably, a new bull market in Bitcoin would favor only a small portion of cryptocurrencies assuming that the majority of cryptocurrencies have an intrinsic value of zero.
The flipside: any push lower might be concerning for the short to medium term.
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