Bitcoin’s February run breaks six-month losing streak – Can it continue?


Bitcoin enthusiasts have cause for celebration, after many frigid months of Crypto Winter. For the first time since July of 2018, Bitcoin valuations actually appreciated for a month, delivering a respectable growth rate for February of 10.4%. One has to return to July and April of last year to find similar positive performance stats, 21.5% and 25.1% returns, respectively.

To the consternation of several Bitcoin analysts, the leading cryptocurrency has been range bound for all of 2019, hovering about $3,800 with very little in the way of price volatility, which had been the defining attribute of this digital asset class. In fact, the volatility index for BTC was the lowest it had been, some 2.70%, since April of 2017. Even July and April of 2018 had wider fluctuation rates of 3.28% and 4.53%.

What is happening in Crypto Land? It was only a month ago that all manner of skeptics were coming out of the woodwork with forecasts of dread. According to them, Bitcoin sat on a precipice and had yet to establish a formidable bottom of support. Until it did, there would be no chance that Bitcoin would ever charge past $4,000 and regain much of the ground it lost during 2018. When asked where that bottom could be, the responses were incredulous, if figures between $1,000 and $2,000 satisfy that definition.

These same analysts had also pontificated a Bitcoin bottom of $6,000 back in 2018, but last November ravaged those predictions. How do these analysts arrive at such predictions? Each one usually provides ample technical analysis on logarithmic daily and weekly charts to support their claims, pointing to various moving averages, falling wedge patterns, or Fibonacci ratios as guidance for future price behavior. Cryptos are still in their embryonic state with a disjointed set of global exchanges that are primarily unregulated. Until the asset class matures, technical analysis will not achieve the success rates that analysts are accustomed to in other trading venues.

How is March shaping up?

Back in February, Bitcoin did test the psychological barrier at $4,000, and for a brief moment, it toyed with $4,200, but the rally lost steam. New reports suggested that major “Whales”, the investors that have incredibly high crypto balances at their various blockchain addresses, have been on an accumulation binge, buying on the dips and preparing for the long haul. Much has been written about impending moves by institutional players into the crypto space that should play out over the next few months. Smart money seems to expect a positive wave formation from these moves and soon.

Bitcoin established a nice stair-stepping pattern in February, and for all intents and purposes, it appears to be following a similar roll out in March. In only a week, it dipped to $3,700 and soon encountered substantial buying demand. It currently rests at $3,866, poised to test once again formidable resistance at the $4,000 level. Alex Kuptsikevich, a financial analyst with FxPro, noted: “Over the past 24 hours, Bitcoin adds more than 3% and trades around $3,900. The $4K level is considered by experts as an important resistance, [a move higher] will open the way for further market growth.”

Most analysts have said they will not change their pessimistic tone until Bitcoin is able to punch through $4,000 and then $5,000 decisively. Regardless of the best technical analysis available, fundamental forces drive market price behavior. Projects led by Fidelity Investments, the Bakkt and ErisX exchanges, the Nasdaq, and the possibility of a long-awaited Bitcoin futures ETF will surely have a long-term impact on market prices and the future credibility of the crypto eco-system.

Read Also: