Greetings Midas Community!
Another week, another Bitcoin analysis article. As every crypto investor is well aware, the price fluctuations of Bitcoin are essential to understand the market in general. Bitcoin – the king of Crypto – largely determines whether the industry is bullish or bearish. In these articles, we are going to conduct price analysis, as well as fundamental analysis in an effort to dissect Bitcoin’s overall trend. Let’s get started.
Price Analysis
To begin, we will look at the price fluctuations of BTC vs. USD on a large (4H) timescale. As we have observed in recent weeks, Bitcoin continues to consolidate between the 9k and 10k price points, preparing for what many expect to be a significant move in either direction. Many analysts believe that the longer Bitcoin trades in a low-volatility zone, the larger its next move will be.
Zooming in on the past few weeks of action (still on the 4H candle chart), we can clearly see that a wedge is forming on the chart. Using the wicks to determine the trendlines, we can see that Bitcoin has consistently found support between the 8800-8900 zones, forming a pattern of higher lows and lower highs. This is a neutral trading pattern.
On the much larger 1D time frame, we can see that this consolidation pattern has been forming for a long time, with higher lows and lower highs forming consistently over the past few years. This dates back to the 2017 bull run, which peaked around the $20k mark, and last year’s peak of $14k. The moving averages currently are bullish, with the 50MA and 100MA sitting above the 200MA. Most traders believe that as long as BTC stays above the 100MA level (currently around $8.6k) – it remains bullish in the mid term.
Investor Sentiment
Fear and greed indicator is usually a contrarian indicator. When the majority of people are at one end, the market tends to cause maximum pain. Generally speaking, when people are fearful (most often after a rapid decline in price) – this is a good time to buy. Alternatively, when people are greedy (most often after a rapid increase in price) – this is a good time to sell. There are other factors that play into this index, such as volatility, momentum, and social media sentiment. Since Bitcoin is primarily a P2P traded instrument, knowing the tide of sentiment can go a long way.
As we have seen in this consolidation period, the market remains slightly fearful. A value of “50” would be perfectly neutral, but as the historical values indicate – we have been in this territory for a long time. While “Extreme Fear” values (below 20) are a great indicator, this indicator is basically neutral and does little to help us predict Bitcoin’s next move.
Fundamentals
After Bitcoin’s block halving, some experts predicted that Bitcoin would plunge into a “death spiral” since mining would cease to be profitable. In essence, if miners consume more electricity than their Bitcoin returns bring them, there is no sense in continuing operation. Bitcoin would be forced to increase miner profitability – either through increasing price or reducing the mining competition.
