Comparison with development three years ago

In today’s analysis, we will compare the recent development of the Bitcoin price with the development of early 2014, when the price was falling from the ATH (All Time High) somewhere deep. We are trying to find an answer to the question whether the bottom has already been found or whether we can expect further sales.

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The chart from 2014 is light blue but its price was multiplied by 13.4x. This number was derived in such a way so the 12,000 $ resistance roughly corresponds to the 900 $ resistance which was there before the MtGox collapse. At first glance, we can see, that these charts are not completely identical. But if it was identical, that would be weird. But we can notices that these graphs have some common features. For example, the first fall followed by reflection is circled by red. The one in 2014 happened sooner and was not so deep, but it does not change the fact that this is a typical occurrence of any such correction.

This is a typical panic sale. This exaggerated reaction is followed by reflection, but the price no longer has the power to endanger the ATH. The next drop is coming ... and that is happening right now. Notice where the price fell in 2014. So we are not at the bottom yet. I set a minimum to 5,000 $ which relies on the peak at the beginning of September 2017.

Where will the price bounce up and what if it does not happen?

Even though it looks, at the time of writing, that it could bounce up at 6,500 $, it could also be the result of a small support defined by a green line that relies on the peak of reflection from the beginning of February (red circle). On the chart from 2014, we see a similar support. At that time, there was another reflection, but I do not expect such a reflection anymore, maybe just a miniature one. This is because a similar correction has already been there and it is indicated by line 1-2.

Conversely, if the Bitcoin’s price follows Elliott’s wave of 1-2-3-4-5, then to finish line 2-3 there must be a fall to at least 5700 USD. Only then the course can climb to the point 4. Point 5 should then lie somewhere near 5000 USD. After completion of this wave, the corrective wave appears and brings us back to the 9000 – 10 000 USD range.

Are there any alternative scenarios? Elliott’s wave does not have to be completed, or it can be completed much slowly. There may be a slight correction, waves near 7000 USD and sales might come later. Personally, I do not think that the bottom has already been found. It’s just a small stop on the way down, where the price follows the green support.

I recommend splitting buy orders in the range 5000 – 7000 USD: Now buy a part, with another part just wait for the price to be around 5000 USD. This strategy may bring a profit in the case we finally get back to 9000 USD.

Sentiment in the market, exchanges, interests

OKEX top traders vote for short (59%). By volume, it is nearly balanced, just slightly for shorts. Bitfinex – the ratio of longs and shorts are balanced, just tiny lead of longs – 37:33 thousands BTC. Interest on dollar loans fell to 0.01%. Bitcoin can be borrowed at 0.019%.

Recommendation: Split your purchases from the current price to 5000 USD and start gradually buying. We are not at the bottom, but we can come to it at any moment.