In the coming months Bitcoin will experience a major ‘bull’ market reversal. Despite the current pessimistic sentiment, several technical analyses indicate that the market is prone to turn around in a few months time. The argument can be made that oversold conditions, usability, and FOMO will drive and sustain prices up. Consistent RSI and Stoch RSI sequences show that oversold conditions prevail and that a declining wedge is forming. In other words, Bitcoin will begin testing lower levels in the coming weeks and in all likelihood it will descend to the mid $2,000 to $1,900.
Past market data shows that previous bear periods on the average last between eight to ten months. And that they take approximately a year and a half to recover. In all occasions, it seems the drop to the bottom is followed by a sharp spike. Using this information, one can deduce that a similar trend is forming which suggest that prices are close to finding a bottom. And when this happens, prices will bounce up. Obviously, there are many divergences that can alter this deduction, but given the new crypto awareness, more and more people want to see Bitcoin recover.
Too big to fail
What makes this bear market different is that it has an almost synthetic feel to it. There are too many interest groups involved and it has too much investment. The building of the infrastructure for a new securitized market is under way, and the costs of it justify the efforts to keep the market alive. Not to mention that crypto currencies’ potential commercial applications make it an almost indispensable investment. Blockchain development, token economy, IOT, lower costs, efficiency, innovation, etc; all depend on crypto currencies for their success.
Bitcoin’s survival has such strong case that two congressional bills were introduced to curb manipulation: the Virtual Currency Consumer Protection Act and U.S. Virtual Currency Market and Regulatory Competitiveness Act. The bills specifically address curbing market price manipulation and researching less intrusive legislation that allows for innovation.
A number of short term reversals are expected to occur, including a few bull traps. However, once the bottom is reached, it will prove too good an opportunity for institutional investors to pass up. Once buying begins, FOMO will once again take over and prices will soar. This time prices will likely stay up kept afloat by the new stabilized system of stablecoins, custody, and regulation.
The probabilities of a market bull in Q1 to Q2 2019 are good, but as aforementioned, there is more price discovery pending to find the bottom. Therefore, it may take a further six months before a proper market reversal can begin.