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Investors are often baffled with Bitcoin’s (BTC) price actions. Last week’s bearish $30,000 can swiftly become this week’s bullish $30,000. With sentiments changing fast, it is no wonder investors find it exhausting to find the right buy opportunity. However, BTC is currently shredding towards a unique support zone which last came into play during the 2018 bear market. The word “bear market” is perceived as a period of inaction by the majority of investors. But what really happens underneath those boring price actions are shakeouts (investors exiting positions) followed by accumulations invisible to the untrained eye. In today’s article, we will explain where Bitcoin is headed if history were to repeat itself and few interesting price actions by altcoins.
Volatility is one of the main reasons why hourly (4h, 1h etc) trends are so difficult to comprehend. Especially when the macro factors (high inflation, interest rates, monkeypox etc) are in shambles, trying to decipher BTC charts may present a headache. On the other hand, trends observed from a higher timeframe (monthly, weekly etc) offers a lot more clarity on where a particular trend is headed. BTC charts on a weekly basis has presented itself with one and we are going to examine now.
Markets are a live demonstration of human behavior. It sways from optimism to pessimism and vice versa depending on the people’s outlook about an asset. Though technical analysis is a lagging indicator and only premises about the past, it can give a glimpse into the potential future. Take a look at the trend lines depicted in the picture below. It's a weekly trend of BTC with 100-week and 200-week simple moving averages (SMA). 100-week SMA is shown as a black line and 200 week-SMA as a blue one. As you can notice the 2018 period (marked in orange circle), whenever BTC plunged below the 100-week SMA, the 200-week SMA acted as a lifeline. Not only it proved to be a powerful support level, BTC went on to deliver parabolic rallies post holding the 200-week SMA.
<source: tradingview, binance>
BTC’s current price actions coupled with the LUNA-UST fiasco has cast a dark shadow on the future of crypto markets. But this is not new for the crypto world and BTC has always come out with flying colors. BTC has lost the 100-week SMA at $36,800 and is struggling at the moment to beat the bears at $30,000. So if anyone who seriously wished to enter the crypto markets during the 2021 frenzy but couldn’t, now can be that time to cost average into BTC.
If history were to repeat, then BTC will successfully test the 200-week SMA in the upcoming months which is currently near $22,000. It will then consolidate in a range and eventually head towards the next cycle of rallies.
But the problem with markets is that nobody can predict with absolute certainty that this will pan out exactly like it did in 2018. The only bet that a rational person can take now is to believe in the fundamentals of BTC and its value proposition as a good store of value will eventually garner the trust of billions of people. It has bounced back in the past multiple times and it's more likely it will do so again.
Bitcoin Gold (BTG), a hard fork of the Bitcoin network and currently ranked 98 in terms of market capitalization, has managed to register more than 20% intraday returns in this bearish climate. While the exact stimulant behind the gains is unknown, the only hint was apparent in the massive 2,000% increase in its trade volumes.
Other notable winners are Kucoin Token (KCS) which is still at 18% profit on a weekly basis on account of launch of Ethereum-compatible Kucoin Community Chain (KCC) and Tron (TRX) which is at a 10% gain due to the sharp rise in the market cap of its stablecoin USDD. A surprise entry in the top 20 list was from a token associated with the Bitfinex exchange ecosystem Unus Sed Leo (LEO). LEO is currently trading at $4.89.
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Disclaimer: This article was authored by Giottus Crypto Exchange as a part of a paid partnership with The News Minute. Crypto-asset or cryptocurrency investments are subject to market risks such as volatility and have no guaranteed returns. Please do your own research before investing and seek independent legal/financial advice if you are unsure about the investments.