Near-Term Bitcoin Trends Analyzed

Bitcoin’s recent movement around the $29,000 border could influence the cryptocurrency market through the end of the year EXANTE senior analyst Victor Argonov said.

While the market drawdown has been going on for more than two months, but the June BTC low of $28,800 has not yet been overcome, Argonov said. Bears’ failure to drive it lower could signal a bottom has been reached.

Argonov sees parallels between the current state and the bear market that closed out 2019. Beginning with the Sept. 26 crash to $8,100 (from $10,000) seven crashes through Jan. 2, 2020 saw BTC fall to $6,900.

“From time to time, the leading cryptocurrency rate crashes, bounces, stabilizes for a while, and then collapses even deeper again,” Argonov observed. “Over time, the intervals between collapses become more and more, and the depth is getting shallower.

“If in September-October the BTC rate collapsed quickly, then in November-December, each new anti-record required almost a month of ‘preparation’. There were also ‘unsuccessful’ collapses on Dec. 7 and Jan. 2, which did not set new anti-records. The failure of the bears on Jan. 2 was taken by market participants as a buy signal, after which the bear market ended and the rate began to rise rapidly.”

Between May 12 and July 20 of this year, BTC dropped from $57,000 to $29,300, with the period low hitting $28,800. The most recent drops didn’t reach that level, and BTC’s price has already started to rebound.

“This is the second failure of the bears,” Argonov said. “The last one was on June 26 and sent BTC to the area above $32,000 for almost a month, but a new failure could be the end of a bear market (as in early 2020).”

Argonov said the range around $30,000 has long been touted as an important marker as stakeholders discuss how much the coin should cost with speculation removed.

BTC’s “base” price of BTC, mostly determined mainly by the contribution of long-term investors who won’t sell, preventing the rate from falling below a certain level, has roughly doubled annually since 2015. At the end of 2021, its estimated price should be at least $28,000-30,000.

While an imperfect method, its important stakeholders know the pattern. Argonov cautioned. It becomes a self-fulfilling prophecy in that the $30,000 level is so talked up that it becomes reality.

Recent movements have little connection with geopolitics, Argonov believes. Chinese mining bans have had little effect. The EU ban on anonymous BTC transactions will take years to enact if it ever happens. The US stock market crash and Grayscale Bitcoin Trust’s unblocking of 16,000 BTC were mere blips.

Three scenarios are likely, Argonov believes. If the BTC rate quickly enters the area above $35,000, this may be perceived as an urgent buy signal by the FOMOs. This could drive BTC north of $50,000 and even to a new record.

Under a flat scenario, BTC would be stuck around its current price due to bull uncertainty and stays at no higher than $40,000 for a long time. As it nears $40,000 skeptics could consolidate profits and produce a correction.

If the bears drop the rate below $28,800, then some rebound is inevitable in any case, but the bear market will continue. It could drop to $27,000 in August.

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