Bitcoin Halving Technical Analysis. Are we Still Bearish?

Since the all-important date is drawing ever closer, the CoinSyncom’s TA team decided to do a big Bitcoin halving technical analysis. This time, we will take into consideration the fact that this is the first time BTC is going into the halving in a relatively pessimistic environment. However, currently, the cryptocurrency market is majorly outperforming all traditional markets.

Crypto vs Traditional Markets

Before we do anything else, let’s underline a few fundamental facts first. Just before the coronavirus pandemic broke out, Bitcoin was on a great rebound trajectory. Yet, after the all-encompassing global lockdown, the biggest crypto took a dive from $10,500 to $3,500. This was in perfect correlation with the stock market which also plummeted synchronously. However, during the last two weeks, Bitcoin outperformed the traditional markets as it is on the way to regain its former price of $10,500.

For example, the Dow Jones Industrial Average (DJI) suffered a 35% decrease as a result of the COVID-19 crisis. Taking into account that the stock market isn’t nearly as volatile as its cryptocurrency counterpart, this can be considered as a devastating blow for investors. Until the date, Dow managed to regain only a portion of its former value as it is still 20% below its latest peak.

Dow Jones Industrial Average
Source: Yahoo Finance

In the meantime, the current price of Bitcoin is $9,720. This means that BTC is only 7% below the latest peak. Therefore, Bitcoin showed a great resistance towards the global coronavirus-induced panic. This means that there is still a chance for Bitcoin to become a real and viable alternative to the traditional financial system. And we do not say this lightly since it is still a bit early for such categorizations. Nevertheless, the whole cryptocurrency market appears to be attracting investors who don’t trust the government-controlled environments in times of crisis. Halving can even help the sentiment further, so we present you with the halving countdown you can also always see in our sidebar.

Bitcoin Halving Countdown Timer

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With all that being said, we have to make some room for the possibility that, because of the mentioned high volatility, BTC just bounced back stronger than traditional assets. Thus, it is possible that, just like it bounced back, it may take another dive. In order to see if that’s going to happen, let’s go deep into our Bitcoin halving technical analysis done in collaboration with Ivan Andrejević. At the end of the day, that’s what we are here for.

The Old Triangle

The majority of our readers surely remember Bitcoin’s technical analysis published on February 10th. Then and there, CoinSyncom, in collaboration with Andrejević, forecasted the drop from $10,500 to $3,500. The same analysis predicted a rebound towards the lower high. However, the scenario played out somewhat quicker than anticipated.

Bitcoin halving technical analysis triangle

The yellow arrows you can see in the BTC/USD weekly chart above were the prognosis of the BTC price movement before the big slide towards $3,500. Instead of taking its time with the rebound, Bitcoin simply skyrocketed, bringing the market on the verge of FOMO. Yet, as the chart shows, we do advise the highest level of caution, and we’re going to explain why.

Bitcoin is in a Parallel Channel

bitcoin halving channel
Source: Coinalyze.net

What you see in the chart above is Bitcoin inside the rising channel formation. While this scenario is nowhere as bearish as, for example, the rising wedge, it still holds a significant reversal possibility. Especially because Bitcoin just hit the strong resistance at approximately, $9,800. This price perfectly correlates with the hypotenuse of the descending triangle in the first chart.

Looking at things another perspective, BTC has just gained almost 30% in a week. However, when we take a look at the buying volume Bitcoin used as the cornerstone for the pump, we realize that it is far from enough to sustain the growth of this scale. The weekly BTC/USD BitMEX chart below confirms this without any doubt.

Bitcoin lowering volume

Bitcoin Broke South of the 200MA on the Weekly Chart

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As another worrying fact for all those who are still long on BTC, there is the 200MA, which often acts as firm support and resistance. On March 13th, Bitcoin broke through the 200MA (the white line in the chart below) support for the first time since 2016. This means that, once an asset breaks this line, in a majority of scenarios, it comes down (or up) to re-test it. If BTC indeed does come down again to test the 200MA on a weekly chart, it would have to go back towards $5,500 again. If “defenses” fail, $3,500 might just become a reality once again. This time, confirming that we are definitely bearish in the year of the Bitcoin rewards halving.

BItcoin halving technical analysis 200MA

If you think that this is nothing to worry about, stay a bit longer and see what we have for you further down the line.

The 4-hour Chart Divergence in the Making

As you may already know, divergences tend to announce trend reversals. Especially if we are talking about RSI and MACD indicators. The 4-hour BTC/USD chart below reveals that, once the last candle closes, we might have both of the mentioned divergences on our hands.

BItcoin possible divergences

If divergences close as we described, it would be possible to see Bitcoin at $7,700 as the first level of support to test.

Bitcoin Support Levels

If everything we forecast comes to pass, it will be important for traders to keep track of the support levels BTC may encounter on its way down. There are two easiest ways to find them, historical and technical. To discover technical levels, the simplest way is to import the Fibonacci retracement into the chart and see what it points to.

Bitcoin halving fibonacci levels technical analysis

According to the chart above, $10,000 is a hard resistance. However, when Fibonacci is concerned, we should not take these numbers as the Holy Bible of trading. Instead, the prices serve as approximations of possible levels. Knowing that we can deduce that $9,900 is close enough to safely say that we have reached the 0.382 Fibonacci level ($10,000).

If traders decide to follow the same path as our TA team, the next support level is the mentioned price of $7,700. If it slides lower than that, Bitcoin has $5,800 as the next stop. This price is probably going to be the same as the 200MA on the weekly chart once that happens. Therefore, be careful while trading around that level. If that level doesn’t hold the price above the water, all hell might break loose as the real FUD is going to start kicking in, making a dangerous sell-off more than possible.

Bitcoin Halving Technical Analysis Conclusion

Bitcoin bounced off the support really nicely, confirming that it’s not really connected to the traditional market and its sentiment. Nevertheless, since this is the Bitcoin halving technical analysis, technicalities are not so favorable as fundamentals. Bitcoin stands at the crossroads and we are 90% sure that it is going to follow CoinSyncom’s analysis from February (which aligns with the one you just read). This means that optimists will have to wait a while longer for the price to indulge their taste.

In the end, we are going to use a traditional and well-known financial market maxim since it is 100% applicable to the current situation:

Sell in May and go Away


Disclaimer:

You should look elsewhere for investment advice since this isn’t it. Even if it looks like it, it’s not. Cryptocurrencies are extremely volatile and risky speculations. Always do your own research. Consider consulting an investment professional prior to investing your money.


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