“What’s the price of those Bitcoin’s you keep talking about?” a friend asks me. I look at my phone and it’s still averaging around $9,200. “About the same as last month mate,” I replied.
Bitcoin (BTC) price has hardly moved an inch in the last six weeks, barely moving 2% in either direction from its average price. Therefore, I’m starting to think it’s a stablecoin now.
Bitcoin’s current “stablecoin” period resembles early 2017
However, this long period of static price reminds me very much of early 2017, when Bitcoin stayed around $900 for the first three months of the year, which was followed by an explosive 300% move in the second quarter, and then just kept going.
Daily crypto market performance. Source: Coin360.com
The question on my mind now is whether we can genuinely expect anything like that to happen in 2020 now that half the year is behind us, or whether Bitcoin has simply topped out and is waiting to drop.
Bitcoin’s downward trend
We all know that the first quarter of 2020 was brutal for Bitcoin. However, after the Black Thursday dump in March, those lucky people that bought at the bottom have already seen a whopping 180% ROI on their investment.
It would be naive of anyone to not expect some of those people to be taking profit, so a period of consolidation is a completely natural thing to expect.
However, what makes BTC very different from other assets is the position the miners are finding themselves in. They have 50% less Bitcoin to sell than before, and the effect of the consolidation following the mini bull-run has put BTC/USD in a downward trend.
BTC/USD 1-day chart. Source: TradingView
At the same time, Bitcoin is less than 1% away from breaking out of this downward channel. The current price of Bitcoin is sitting at just under $9,300 and the resistance of the descending channel on the daily is a mere $9,350.
This also puts the mid-channel support around $8,900, and the final support before signaling a greater move down at $8,350. From here, all hope of an immediate bull run would be lost.
The hopium approach
Zooming out to the weekly chart for Bitcoin, and drawing Fibonacci lines using the 2017 ATH peak to the 2019 bottom, we can see that BTC has been hovering around the 0.382 Fib for several weeks, sometimes crossing up, and sometimes crossing down.
BTC/USD 1-week chart. Source: TradingView
With Fibonacci trading, you look at the next levels as potential targets, and typically once the 0.382 has been broken after rising through 0.236, the next level is the 0.5 or 50% Fib, which sits at $11,500.
If the 0.382 of $9,250 can become support in the upcoming week, then bears are in for a bad time. Conversely, if the support of $8,350 fails to hold, it’s a long way down for Bitcoin to go to find new support on the 0.236, which puts the downside target at $7,000.
The MACD is showing signs of a reversal
BTC/USD 1-week MACD chart Source: TradingView
In last week’s technical…