Bitcoin started this year with a push above 4000 but has now dropped below 3500. The bearish run just completed a corrective pattern suggesting price might break upside in the coming days.
January 30, 2019 | AtoZ Markets – Around mid-December 2018, Bitcoin hit its 1-year low after the November 2018 bearish break saw price dipped to 3100. The last two weeks of 2018 saw a shallow resurgence as price left the 3000s territory to hit close to 4000. The rally has continued this year, completing a short term trend pattern and then fell just again – now below 3500. During the current bearish run, the entire cryptocurrency market has lost massively. From the November breakout to mid-December 2018 when most cryptos recorded new 2018 lows, the market lost 55% of its market values. In dollar value, that was $120 billion.
At the turn of the year, the market has gained $44 billion after making good runs in the last weeks of 2019. However, the current dip has seen another $30 billion loss. Currently, the entire crypto market cap is $113 billion. In contrast, about 13-14 months ago, it was close to the $1 trillion mark. Bitcoin still maintain 53% market dominance with $60 billion market cap.
BTCUSD Technical Analysis and Important Price Levels
From technical outlook, we might see another bullish run in the coming days or weeks. After price broke out of the 9-month triangle pattern in November, it completed an impulse wave downside to 3100 as the chart below shows.
At the end of this move, it was expected that at least a 3-wave corrective rally would be seen to 5000-5500 before the bearish run continues. This scenario supports further price slump to $1800 or even below $1000 but after a 3-wave correction. On the other hand, a 5-wave rally into 6000-7000 territory could be the start of a real recovery which might see BTC trading above 10,000 again. From 3100, price completed another impulse wave rally -wave (i) or (a) – at 4200 which was as expected followed by a dip – wave (ii) or (b). After the current dip, a new rally – wave (iii) or (c) should be followed to 4500 or above depending on which of the two scenarios earlier mentioned would play out. The dip has gone further to 3500 as the chart below shows.
The drop from 4200 looks very familiar – a zigzag pattern. Wave c of (b)/(ii) also completed an ending diagonal pattern. Ending diagonal patterns are famous for big price break. A break above 3600 will most likely see BTC trading above 4200 in the coming days or weeks. How far the rally goes and the kind of pattern it completes will give clues on what could happen next. If price doesn’t break upside but drop below 3100 instead, the bearish run would continue to 2500 and 1800.