Bitcoin Is Bottoming, Right Now, It’s Time To Get In

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Bitcoin Is Bottoming, Right Now, It’s Time To Get In

It Looks Like Bitcoin Is Bottoming

After a long and protracted 3.5 month consolidation process it looks like Bitcoin is bottoming. The token fell to hit an almost four-month low over the weekend and has since bounced back. The bounce-back is not super strong, it didn’t form a double-digit percentage increase, but it doesn’t have to. Bitcoin is confirming support at an important price level and set up to rally.

Support is near the $7,800 level. This level was resistance in June and the location of an important technical consolidation. The consolidation formed during the summer rally, as the entire cryptomarket was getting a boost from the Litecoin Halving, and resulted in the July break-out and rally. This price level is important because it represents a shift of market sentiment. No longer are the 2020-Bears in control.

The weekly chart is still bearish. The indicators suggest selling may persist in the near term but there are caveats. Don’t get to bearish. Stochastic for one is already in oversold territory so it is unlikely price action will move much lower without a break-down of BTC fundamentals. Momentum is likewise bearish but weak and not suggestive of market conviction. If price action were to fall it would take a significant amount of work on the bears part and, if successful, would result in a sharp decline possibly as low $6,000.

In terms of fundamentals, Bitcoin’s hashrate and dominance continue to trend skyward. Dominance is hanging around 67% to 70% right now while the hashrate is hanging just under a very-recently set all-time high. These metrics are indicative of a market gearing up for next year’s Halving, an event I expect will drive BTC to a new all-time high. Until then, traders should keep a close eye on today’s support levels because it could be the starting point for the Halving-Rally.

If prices move higher as I suspect they will the first target for resistance is the short-term moving average. Once price action moves above the EMA a move up to the top of the narrowing consolidation range near $9,500 is probable. Once price action breaks out of the triangle pattern a new rally will be able to start and it may drive prices up to $13,000 by the end of the year.

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Bitcoin Is Now Undervalued, Suggests This Price Metric

Omkar Godbole

Bitcoin Is Now Undervalued, Suggests This Price Metric

  • Bitcoin’s MVRV Z-score suggests the cryptocurrency is underpriced and could be trading near a major bottom.
  • Short-term technical charts indicate scope for a test of price resistance near $5,900.
  • A violation of an ascending trendline support on the four-hour chart would expose the recent low below $4,000.

A key metric suggests bitcoin (BTC) is now trading at a relatively discounted price, having dropped by 60 percent in the last three weeks.

Bitcoin’s market value to realized value (MVRV) Z-score fell below zero on Friday and stood at -0.18 as of Monday, according to crypto analytics firm Glassnode. The metric is used to to identify periods where the cryptocurrency is under- or overvalued

The Z-score has turned negative for the first time in 12 months, suggesting the cryptocurrency is now undervalued.

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Bitcoin topped out at $10,500 in mid-February and fell to a 12-month low of $3,867 on March 13, according to CoinDesk’s Bitcoin Price Index.

The cryptocurrency suffered a staggering 39 percent drop Thursday as the coronavirus-led sell-off in the global stock markets triggered margin calls and forced investors to liquidate their positions in bitcoin and other markets including gold and U.S. Treasurys.

Calculating MVRV Z-score

Bitcoin’s market value refers to the total dollar value of the supply in circulation, as calculated by the daily average price across major exchanges.

Meanwhile, the realized value approximates the value paid for all coins in existence by adding the market value of coins at the time they last moved on the blockchain.

The latter is closer to fair value as it adjusts for lost coins and those being held for the long term (so-called HODLing). As such, the MVRV Z-score essentially represents the distance or deviation from the realized value.

Bottoming out?

Historically, a below-zero MVRV Z-score (green area) has marked market bottoms, while a reading above 7 has marked tops.

For example, bitcoin fell below $6,000 on Nov. 14, signaling an extension of the sell-off from the record high of $20,000 reached in December 2020. It had dropped to $3,400 by Nov. 25.

The Z-score also turned negative in the second half of November and declined to -0.51 by mid-December. The sell-off ran out of steam near $3,100 in December and, after some consolidation, broke into a bull market in April.

Essentially, the ebbing of downside momentum was reflected in the Z-score’s negative turn.

Going back further, the 2020 bear market, which began at highs above $1,000 at the end of 2020, ran out of steam near $150 in January 2020 with the Z-score falling to -0.50. Again, after consolidating for some months, the cryptocurrency broke into a bull market in November 2020.

So if history is a guide, the current MVRV Z-score of -0.18 suggests the cryptocurrency could be trading near a bottom.

At press time, bitcoin is trading in the green near $5,335, representing a near 18 percent gain over 24 hours.

Equity futures rebound

The recovery may be associated with the positive action in the U.S. stock futures and the Asian and European equity markets. Notably, futures on the S&P 500, Wall Street’s equity index and the benchmark for global equities, rose nearly 5 percent early Tuesday, triggering a “limit up”.

Bitcoin has recently been tracking action in the equity markets and could continue to do so in the short term. From a technical perspective, though, there is scope for an extension of the ongoing recovery rally.

Daily chart

Bitcoin created a hammer candle on Monday, validating oversold conditions suggested by the 14-day relative strength index. A hammer comprises a long lower wick with a small body, and occurs when the sellers fail to keep prices at the lowest point of the day. Essentially, it represents seller exhaustion.

As a result, a move to the $5,900–$6,000 range may be seen in the next 24 hours or so. That range has recently capped upside in the cryptocurrency.

4-hour chart

Buyers need to prevent a break below the ascending trendline support, currently at $4,672, which would negate a bullish higher low at $4,435 that formed Monday.

A violation there would shift risk in favor of a drop to $4,000. The chart shows the area above $5,900 has proved a tough nut to crack for the bulls over the last four days. As a result, a sustained move above that level is needed to invite stronger buying pressure.

Disclosure: The author holds no cryptocurrency at the time of writing.

Here’s Why Bitcoin Didn’t Bottom at $3,800 According to a Top Analyst

While Bitcoin seemingly remains in a bear trend, sentiment has spread over the past few days that the cryptocurrency market has bottomed; analysts cite the fact that BitMEX funding rates are decisively negative, suggesting an extreme bottom, along with other technical analysis-based evidence to back their lofty opinion.

But according to a top analyst, there is no way Bitcoin has bottomed yet. Here’s why.

Why Bitcoin Might Not Have Bottomed Yet

Over the past week, Bitcoin has shown a remarkable correlation with traditional markets; when traditional markets crashed on Monday, so did BTC, and when they saw record losses on Thursday, so did our favorite orange coin.

According to prominent cryptocurrency trader Cantering Clark, this correlation is a clear sign that the cryptocurrency market has not yet put in a bottom.

In a five-part Twitter thread published Saturday, he explained his thought process further:

“We essentially just went from Bull market to Bear market in under 20 days. The true extent of the knock on effects & damage has yet to even be revealed. We are seeing a fraction of what the reality is.”

Bitcoin has not bottomed because equities have not bottomed.

Go ahead and save this tweet.$BTC $SPX $ES

He explained further that as it stands, some of the world’s “largest and most fundamentally important industries” are being infected, meaning that the stock market and financial system could continue to see continued pressure as time elapses. This, Cantering Clark wrote, will likely cause BTC to slide if equities see weakness:

“Bitcoin will be free to put in whatever positive price action it can when the major markets idle. As they say “When the cats away the mice will play” The moment equities shit the bed again Bitcoin will follow.”

The analyst further explained that there’s also no telling which crypto companies, including Bitcoin exchanges, will be affected by the global fallout of a recessionary event, further putting BTC at risk of collapse.

This sentiment has been echoed by others. Per previous reports from NewsBTC, prominent TradingView analyst CryptoBullet wrote that a recession should be the last thing crypto investors wish for:

“When there are concerns in the economy, when everyone is worried about a crisis and losing jobs, the last thing people want to do is speculate on some crazy cryptocurrency.”

Nick Chong

Since 2020, Nick has shown interest in Bitcoin and cryptocurrencies. He has since become involved in the industry as a full-time content creator, working for NewsBTC, Bitcoinist, LongHash, among other outlets. Aside from covering.

Bitcoin (BTC) Price Prediction — $3,500 a New Bottom?

The fall of the cryptocurrency market did stop yesterday. The Bitcoin (BTC) rate has fallen below $4,000. As a result, all prospective coins remain in the red zone.

The market dump has positively affected Bitcoin’s (BTC) dominance rate, which has increased over the past week. The current index amounts to 64.4%.

Relevant data for Bitcoin is below.

Market Cap: $103 229 688 542

Volume (24h): $78 727 879 632

Change (24h): -23.09%

This data is relevant at press time.

BTC/USD: Has Bitcoin already reached the bottom?

The $3,600 level can be considered the bottom as there was huge buying volume here. However, the decline has amounted to around 25% in the past 24 hours, which could be considered one of the biggest dumps in the past few years.

Based on the daily chart, one can consider the current situation to be a market dump rather than the start of continued decline. It is important to pay attention to the closing daily candle.

If it closes with a long wick, there is every chance for Bitcoin (BTC) to return to $8,000 by the end of the current month. In addition, the main line of the Bollinger Band indicator is located at that level.

Bitcoin is trading at $5,350 at press time.

About the author

With more than 5 years of trading, Denys has a deep knowledge of both technical and fundamental market analysis. Mainly, he has started his blog on TradingView where publishes all relevant information and make predictions about top coins.
Thus, his experience is backed up by working in top blockchain related companies such as W12, Platinum Listing & ICO Advisory, ATB Coin, and others.

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