Bitcoin (BTC) has long been known for its strong parabolic price dynamics. The increase from $ 1,000 to $ 20,000 in 2017 is the most typical parabola – marked by fast-reaching peaks, and BTC has jumped 60% just weeks after reaching its peak.
Even so, the leading cryptocurrency also trades down parabolic. A well-known analyst recently warned that Bitcoin's “parabolic reduction structure” is currently in shape, suggesting a more powerful collapse is approaching.
Not many people talk about downside parabolic structures, but they're important to pay attention to.
This recent structure has a much more aggressive slope to it than the post-china pump bleed out, which means sellers are more aggressive.
Watching for a $ 8240 bounce potentially pic.twitter.com/PMVDnPmUYy
– Jacob Canfield (@JacobCanfield) February 28, 2020
“Not many people talk about reduced parabolic structures, but they are very important to pay attention to.
This structure recently has a steeper slope than Chinese post-pump, which means that sellers will be more active.
Wait for Bitcoin to bounce from $ 8,240. ”
Bitcoin is likely to fall even further, predicting an increase in parabolic structure
CNBC Trader Jacob Canfield shared the chart below on Friday morning, showing that Bitcoin is trading in a reduced parabolic structure marked with a new low level faster and faster.
Canfield's description of the parabola shows that if Bitcoin does not break through the parabola, the asset will drop to $ 6,400 by the second week of March – the bottom of the range in the past few months. In some situations, BTC moved to $ 6,400 from the current price of $ 8,651 – equivalent to a decline of nearly 27%.
There are some positive signs
CryptoWolf analyst thinks that Bitcoin is maintaining the 21-week EMA (currently at $ 8,750) – the common MA used by analysts to determine asset trends. This situation refers to the “beginning of the new parabola”.
Bitcoin holding the 21WEMA, or this EMA ribbon if you prefer, would mean the start of a new parabolic advance. pic.twitter.com/WDx27yrysJ
– CryptoWolf (@IamCryptoWolf) February 27, 2020
Indeed, CryptoWolf shared the chart and pointed out that the previous bull run that brought BTC from $ 1,000 to $ 20,000 was terminated by continuous increases from the 21-week EMA.
BTC appears to be poised to hold this level on its weekly chart, currently trading exactly where the MA operates. CryptoWolf's tweet implies that if Bitcoin holds the aforementioned MA, it will recover strongly in the coming weeks.
Not to mention, the basic indices of the cryptocurrency market still seem to be very positive. Federal Reserve chairman Jerome Powell suggested the central bank may soon cut interest rates again.
Leading analysts, both in the traditional and cryptocurrency markets, believe that monetary easing policy will be a major catalyst for Bitcoin's future growth.
Bitcoin falling below the MA has created the golden cross super bullish
Bitcoin recently created a golden cross, in which the 50-day MA closes above the 200-day MA and traders consider this to be a very bullish indicator. However, the leading cryptocurrency plummeted shortly after the formation of this cross.
BTC / USD fell below both DMA 50 and 200 at the beginning of the week, contrary to the bullish sentiment drawn from the golden cross pattern. The pair traded on Friday set a weekly low of $ 8,428 from the weekly high of $ 10,030 on US exchange Coinbase.
Bitcoin fell into the sell trap as soon as investors began to lose confidence in global stocks and commodities. At an attractive profit peak, cryptocurrencies have become a key asset in the eyes of those seeking to make money. They sold anything to buy and ran for the security of whatever they felt heavenly.
Even gold, often considered an outdated version of digital Bitcoin, has dropped sharply before the end of the week. Investors sold it for cash, similar to how they did it during the 2008 financial crisis.
Despite today's reverse, the price of #gold is still up over 6.5% so far this year. Yet the GDX, an index of gold mining stocks is down almost 10%. Traders still don't get it. Gold is headed much higher, as are the earnings & reserve values of companies that mine it. Buy the dip!
– Peter Schiff (@PeterSchiff) February 28, 2020
“Even though prices are down today, their prices have increased by more than 6.5% so far. However, GDX is the index of gold mining stocks are down nearly 10%. Trader still does not understand that. Gold is reaching a much higher peak and so are the income, the reserves of the companies that exploit it. Buy dip ”.
Low predictive power
In general, the bearish action of Bitcoin shows that investors do not consider golden cross as a signal to enter the market. The trend also suggests that the index has very little predictive power against serious macroeconomic foundations. Sometimes, prices go up, and sometimes, they go down.
But considering the signals from the U.S. index Dow Jones that formed Cross 2019 for the first time in 3 years, we can see that they tend to give consistent positive results after 6 months or longer. The Dow has increased more than 14% since February 12, 2020, after making a golden cross on March 19 last year.
However, the hyper-technical indicator failed, affected by the spread of Corona virus inside and outside China. As soon as the Dow fell below the golden cross in the latest sell-off, investors just want to liquidate. Thus, Bitcoin, which has increased by more than 40% before plunging, has no chance to return to the golden age.
Hope for Bitcoin
On Friday, the US Federal Reserve said it had bailed out the market by assuring investors that “the basic index of the US economy remains strong.” However, Chairman Jerome Powell also said that they would “act appropriately to support the economy”. Jerome Powell said:
“Corona Virus poses risks of economic activity development. The Federal Reserve is closely monitoring the development process and its implications for economic prospects. ”
The statements were made at the time the market called on the Fed to implement a new rate cut measure. Unlike the European Central Bank, which has moderate policies that pushed interest rates below zero, the Fed still has scope to cut itself. Specific current is 1.5% to 1.75%.
Easy borrowing can give investors more money to support their portfolio. Part of that cash could also be poured into Bitcoin, causing it to continue its upward trend on the golden cross, especially after the supply cut through the halving event in May 2020.
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According to Tapchibitcoin