Those who have been awaiting a thaw to the crypto winter are celebrating new Bitcoin highs for the first time since the Bitcoin bull market of 2017. In June of 2019 Bitcoin once again crossed the $10,000 resistance level. This has left many speculators to predict that a new crypto bull market is about to begin.
It is true that the rise in Bitcoin value is a positive development for cryptocurrency investors. Some, however, believe that the anticipation of Bitcoin passing $20,000 in value is premature. Do the technical indicators support a new bull run for crypto? Or have investors fallen victim to false sentiment? Here is our take on these developments.
The Fundamentals of Bitcoin’s 2019 Surge
Cryptocurrency has become a mainstream investment vehicle. Bitcoin, Ethereum, and other tokens now compete with other asset classes on exchanges that are solely devoted to trading digital assets. This has produced a large number of technical analysts who use traditional investment tools to make predictions about the crypto market.
Before looking at some of the technical indicators to try and determine if a Bitcoin bull run is in progress, it should be stated that the overall sentiment toward cryptocurrencies is slowly changing. They have become an asset class that many mainstream investors can no longer ignore. In short, there are far more players in the cryptocurrency market today than there were in 2017 when Bitcoin went to the moon before crashing back to earth. These new investors bring more capital, more analysis, and more sentiment to the table. All of those factors affect the price of Bitcoin.
Even more relevant is the willingness of major corporations to launch their own blockchains and tokens. Right now Facebook is preparing its Libra stablecoin which will launch in the first half of 2020. As these entities get involved, blockchain technology and cryptocurrency gain more legitimacy. Some have even proposed that blockchains are going to eventually replace legacy banking systems entirely.
So, what you have at the moment is an environment where Bitcoin sentiment is very high and very positive. As smart investors know, sentiment is what drives technical indicators like the MACD, RSI, and other tools. Those tools can be used to reasonably predict market movement. Many Bitcoin analysts are seeing correlations with the Bitcoin bull market of 2017.
The current rally of Bitcoin is parabolic. One can observe that the current trend toward bullish sentiment began back in February of 2019. In four months time the value of Bitcoin has doubled. Back in 2017 the market cap for Bitcoin doubled. We are talking about an investment class that literally has the ability to change fortunes overnight. The volatility of the crypto market only makes it more difficult for analysts to accurately predict where the Bitcoin market is headed.
Are New Players Prompting a Bitcoin Crypto Bull Market?
The marketplace today for cryptocurrencies is a much different landscape than it was two years ago. There is a different awareness that is driven by the entry of some big players in the blockchain arena. Perhaps the largest of them all is Facebook. After months of speculation, the social media giant has finally confirmed that it intends to release a digital token called Libra in the coming months. The project is already under development.
So, why does this matter where a Bitcoin bull market is concerned? Because the participation of a giant like Facebook in cryptocurrency and blockchain development drives positive sentiment. The development is seen as a positive one for all cryptocurrencies in the long run.
It is also becoming clearer that individuals are beginning to accept that cryptocurrencies are here to stay. They are not going away and have become a legitimate asset class. As this acceptance grows it will become harder for governments to continue their resistance to the era of a cashless society. Once again, this drives sentiment.
Bitcoin Analysts See Positive Technical Indicators
A new Bitcoin bull market seems to be indicated by technical indicators such as candlestick patterns. At the time of this writing analysts point out that candlesticks are banding along the upper Bollinger Band. This type of pattern typically hints at strong momentum for growth. It can also reflect a strong breakout pattern.
Another aspect of technical analysis that seems positive is the breach of $10,000 resistance. Many have believed that Bitcoin is primed to move much higher once this level was surpassed. The token didn’t take long to move past $11,000 after the resistance was crossed, further encouraging sentiment that a crypto bull run was in progress.
Many analysts are also pointing out that they see many similarities between the Bitcoin bull market of 2017 with the current charts. This has driven investors to buy in the hopes of an increase.
Stick with Buying the Dip
CryptoSwede believes that the consideration of a new Bitcoin bull market should be approached with caution. The token may very well be headed for an all-time high, but there are also some indicators that reveal that the crypto bull market will continue.
The cryptocurrency markets have always been volatile environments. Even if Bitcoin is on the upswing it is still reasonable to expect dips in value. The wise investor may be able to score profits by buying on the dip while retaining a willingness to take profits as they come.
Cryptocurrency speculation carries an inherent risk. Be prepared to manage this risk wisely as the world waits to see what Bitcoin will do before the end of 2019.