Cryptocurrency Analysis

[IFX_Selena]

Bitcoin: Signs of a bull market and three scenarios for BTC/USD

The technical picture on the Bitcoin chart shows that the threat of a bear market has passed, the main cryptocurrency and the market as a whole retain growth potential. Below we will consider the main arguments in favor of their further medium-term strengthening.

Right now, the Cryptocurrency Market Fear and Greed Index shows extreme fear. In two days, the indicator shifted from a state of fear to extreme fear. This could be a sign of a high level of anxiety in the market where investors are irrationally dumping coins. Such situations often form good entry points for buying, which is now confirmed by the technical picture for Bitcoin.

Analysts who track the dynamics of the average transaction fee for Bitcoin note that there are prerequisites for a bullish reversal of the cryptocurrency, and BTC may rise above 40,000 per coin.

So, historical data on the average transaction fee shows that it fell from July 2018 to January 2019. Along the way, the price of the main cryptocurrency on the chart was growing. Now, if this trend repeats, the recent drop in transaction fees would push Bitcoin up at least 20% from current prices.

It is noteworthy that a false breakout by a long shadow of the key Bitcoin support level of 31,082.82 (red dotted line), as well as the subsequent cautious recovery, was accompanied by an increase in the capitalization of the cryptocurrency market. According to data from coinmarketcap.com, the entire market capitalization increased by more than $200 billion in a day. This would not have happened in the transition to a bear market.

Some experts associate the fall in Bitcoin with the approaching expiration date of derivatives.

At the same time, the technical picture on the chart remains very indicative: long lower candlestick shadows, a rebound from support at 34,708.27 (red dotted line), and its false breakout indicate that there is a large player here defending the area near $30,000 per coin. He does not let the price go below, and so far he has enough strength for it.

Until the level of 31,082.82 (red dotted line) is truly broken, until the level is consolidated below the horizontal at 28,392.99, it is too early to talk about the advantage of the bears. With such a technical picture, it remains to wait for a recovery in a wide sideways trend 28,392.99 - 41,980.24.

Now let's take a look locally. The nearest target for growth, resistance 34,708.27, has not been taken yet. Its breakdown and consolidation above will open the way for BTC/USD to the level of 38,610.88. It is not yet clear when this will happen. Predicting terms on the market is a thankless task, so we will not.

Possible scenarios now look like this: first - breakout and consolidation above 34,708.27 and growth to the horizontal at 38,610.88 (upper red dotted line); the second is the continuation of consolidation in the range between the levels 34,708.27 - 34,708.27. The third - and so far, apparently, unlikely - is a true breakdown of support at 34,708.27 and the level of 28,392.99. Fixing below them will be a bearish signal for the market.







Ekaterina Kiseleva
Analytical expert
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