Bitcoin appears to be looking at a little more downside before it becomes a reasonable buy again, according to a pair of crypto industry commentators. Having recently rebounded from what most traders are considering the ultimate bottom of the 2018 bear market, we could be looking at a further drop then sideways trading for a while.
Such price action has been seen in the Bitcoin market numerous times before. If similar happens again, the sideways action will eventually result in a breakout to the upside.
A Bigger Drop for Bitcoin?
Referencing the work of Civic (CVC) founder and CEO, Vinny Lingham, Nunya Bizniz (@Pladizow) has identified a price of around two times the widely agreed upon December low as a conservative buying opportunity. Based on previous market cycles, a period of consolidation, that might last months, will follow a further drop from current levels:
As @VinnyLingham pointed out, once BTC has gone 2X from its low – this typically marks a conservative opportunity to buy.
However, as marked by the orange boxes, sideways at the 2X level is typical.
Looks like what BTC is now doing, is normal. pic.twitter.com/zuxCUmz4wp
— Nunya Bizniz (@Pladizow) October 4, 2019
The above chart references three other periods of such consolidation. The first is at the end of 2012 to mid-2013. Then a shorter period during the epic run up in price of 2013. Finally, the period just before the 2016-2017 bull run. Lingham has commented on the importance of the market consolidating after dramatic moves such as those witnessed since mid-2017 in previous works.
On each of these occasions, Bitcoin reached an ultimate bottom, returned to prices of around two times greater than that bottom, before trading sideways for a period of weeks to months.
Currently, the price of Bitcoin is around $8,000. For it to reach the “conservative opportunity to buy”, it will need to drop a little further. The ultimate December low on the chart used by Nunya Bizniz is actually $3,148. For Bitcoin to follow the above patterns, it would need to drop about another $1,700.
According to the trends observed by the Twitter-based market commentator, the price will then enter a period of consolidation. Such periods, according to Lingham, are crucial to avoid repeats of the kinds of bubbles seen previously. Prior to the mid-2017, extreme run up, he wrote:
“Bitcoin has spent the better part of 3 years recovering from a pretty damaging boom/bust cycle… Yes, Bitcoin is both scarce & valuable, which will lead to the price continuing to increase over time, but if that happens too quickly, we will enter another boom/bust cycle — which is really not an ideal situation if we want Bitcoin to move from a commodity to a store of value.”
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