Last week, it was all exuberance and high price predictions. Now, just because the Bitcoin bull market has lost a bit of its steam, some are already wondering if this bull market has already hit a peak before going into a bear market.
This couldn’t be further from the truth. Consolidation is absolutely necessary, and buyer exhaustion occurs in all markets. Even though Bitcoin’s price has dropped back down to around $10,100, this bull market can still carry on.
One tactic that helps is to zoom out and look at price movement and candlestick formations on a 1 week basis, or even 1 month. This shows a much more positive picture, and it would be delusional to expect every day to bring further price increases every week.
Recent History and the Bearish Case
Last week also brought us a notable drop in Bitcoin’s price, but this was mostly caused by downages across several crypto exchanges, including Coinbase.
This new correction seems more like a healthy correction as momentum is balanced out and some of the inflow of money to the crypto ecosystem is temporarily exhausted.
Many are worried that there could be a drop in price below $10k into the 4-figure range could psychologically dampen the current bull market even further. There are also technical indicators – a so-called “gravestone doji” – that show a bearish future for Bitcoin. One of these is Bitcoin’s inability to maintain its parabolic trend. Allegedly, this could indicate a much stronger price correction in the near future, since it couldn’t maintain its massive momentum.
The strongest case for a further correction could be the current Bitcoin dominance level, which is over 60%. In addition to occupying a large portion of the cryptocurrency market, Bitcoin is also creaming all the other altcoins right now. Litecoin is suffering the most, but it really is a Bitcoin game at the moment, which means we could see a shift of these funds into other altcoins as Bitcoin investors look to balance their portfolio.
The Bullish Case Remains
Analysts are calling for Bitcoin to begin trading up near its all-time high of $20k within just a few weeks, and believe that stratospherically high prices of $50k or even $100k. Granted, these are optimistic predictions, but with all of the hype that has occurred in the last few months, they are becoming slowly more believable.
One of the most interesting fundamental reasons why Bitcoin could continue to go up is the growing concern about capital flight from China. Bitcoin’s naturally censorship resistant qualities make it a prime method for Chinese nationals to move their money out of China.
So although we are seeing slowdowns in the price of Bitcoin in the near-term, it seems like there are many reasons why it could continue to rise. Technical indicators are often outweighed by fundamental indicators, and the fact that it has broken to so many new levels so quickly and is now consolidating says that if it can maintain these levels a little longer, the bull market may soon gain more steam.