We’re close to the end of November 2019, and we could draw some conclusions on how Bitcoin (BITCOMP) performed so far this year, what were some of the important events, as well as what lies ahead for the most important cryptocurrency.
There are many factors that could drive Bitcoin in either direction, which is why we would like to talk briefly about this year’s Bitcoin performance and two potential scenarios for the next few months. Traders should also bear in mind that unexpected events could happen in the meantime, which leaves our analysis open for additional factors.
Bitcoin’s performance in 2019
January 1st, 2019 saw Bitcoin opening at $3,693 and by June 26th it staged an impressive recovery that extended towards $13,880 on the Bitstamp exchange. If we do the math, that means an impressive 275.84% bull run, which took by surprise even some of the most optimistic analysts.
However, June 26th had also been the day when Bitcoin topped and until October 23rd it retraced towards $7,293, erasing more than 60% of the year’s gains. What looked like a consolidation move at the beginning continues to extend on the downside at the time of writing.
We’re still up on the year by more than 100%, but there are plenty of factors that are able to have a meaningful impact on how Bitcoin will perform over the next few months and in the following paragraphs, we’ll try to cover some of the most important ones.
Weakening technical picture
Speaking of the technical picture, during the first half of the year we’ve seen an impressive bullish parabolic structure, which propelled the price to levels not seen since January 2018. However, the performance that followed since June 2019 negated the parabolic structure and we’re now in a zone where anything can happen: a further selloff or a new rebound.
On the positive side, we could mention that the selloff had not been aggressive so far. Usually, when parabolic structures break they do it in a very impulsive fashion. Since that did not happen, it means selling had been relatively contained. On the other hand, the structure is not valid anymore, which leaves Bitcoin in the hands of new positive crypto news, in order to start a new surge on the upside.
The positive scenario
Back in April, Bitcoin managed to break impulsively above $6,000 a key support area and a previous floor that held for 8 months in 2018. Despite being a major key area, the market broke above and did not retest it at least one time, which is a little unusual. Based on technical analysis principles, the market should retest an area like this, especially after the price reacted to it for an extended period of time.
However, as can be seen in our above chart, the retest did not take place and Bitcoin continued on its way higher impulsively. Yet at the time of writing, the price seems to be gravitating lower, potentially heading towards the key $6,000 area again. We believe that will be a major inflection point and if buyers will be able to defend it successfully, a new major bull run could start.
The main weakness in this scenario is that Bitcoin could be hovering around $6,000 for an extended period of time like it did in 2018. Still, impulsive buying around will confirm that market participants are eager to place big orders and that could tilt the balance in the favor of bulls.
The negative scenario
On the other hand, the negative scenario is derived using the Elliot Wave Theory, which puts Bitcoin in an ABC-type consolidation structure. If the theory is correct, we are now in the wave C of this large consolidation phase, which means will continue to extend lower, potentially below the 2018 lows.
In case this will turn out to be the Bitcoin’s performance, then the key $6,000 area mentioned previously will the “make-or-break” detail for Bitcoin. A strong breakout below it will activate our negative scenario and will mean Bitcoin is poised for weakness.
At the present time, we can easily notice a series of lower lows and lower highs on the daily chart, which communicates sellers are the ones in control. Until the price action will change, we believe Bitcoin will continue to head south.
Summary
Our conclusion is that Bitcoin currently sits in a difficult position, which leaves it vulnerable for some further weakness. As we’ve highlighted, the $6,000 will be key in determining the future price direction. We’re still above $6,000 which means the bullish scenario is slightly favored at the present time (55% probability to happen), but bear in mind that buyers will need to defend the level in order to have a confirmation that a new bull run will start.
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