The whole of 2018 was a tough year for crypto currencies. Reeling from a boom run which took Bitcoin from $200 to $20000, the market entered into the bust phase and declined approximately 70% over the course of the year.
But there is hope. We probably are out of one of the worst price declines for Bitcoin and moving closer towards the next bull run. How do I know? Well, I don’t but I can make a bold prediction to what is going to come.
My first prediction for this article. The bear market is over. Trendlines prove it. Here let me show you.
Look down to the very bottom right at the end of the chart. You will see that just recently we broke above the trendline and have continued to close above it. Now, as long as we continue to close above it we are out of the bear market.
But hold on, I want to share something else with you.
In this picture I’ve drawn four other trendlines that could have signified the same thing I said above, so either I’m full of it or something else must be the case.
The continuing breaks represent a further movement away from the mania of 2017. Each successive trendline occurs at less of an angle than the last. Time has a lot to do with it, but as well, prices are not declining as much as they were before. As long as BTC doesn’t go to zero, eventually the trendlines should start to look like this.
The picture above is a log graph of the previous Bitcoin crash from 1000. The crash has been similar to what we are experiencing now. A quick run up, mania at the top, followed by a long crash to bottom, where it flattened out and then a 100x run up to new ATH’s.
Let’s take a look at another set of trendlines.
In this chart, I’ve drawn trendlines from the bottom wicks of the previous run up. These help identify key support levels as Bitcoin continues to come down.
The topmost trendline served as strong support for many months. It was tested, meaning price touched it or briefly closed below it. When price tests a trendline over and over like this, it raises the probability of it breaking it as times goes on. It can take a while though, as seen in the case of BTC crashing through it 6 months after the first test.
The second trendline is where we are at now. Price has tested the trendline once, but we will probably test it again at some point.
The bottom trendline is the support level tested before the real meat of the bull run kicked off. It’s probably going to serve as the level which Bitcoin bottoms out. At this point, the price action of the last two years would essentially be wiped off the table. Everyone would be underwater who bought in after the bull run kicked off. Personally, I don’t think the price would stay at this level too long before bouncing hard, but we shall see if we even touch it.
Another way to use trendlines is to connect two previous wicks, either bottoms or tops and then extend the trendline from there. Applied to Bitcoin it looks like this.
The up move in 2017 was gigantic, and so it’s hard to draw trendlines which resemble anything serious at this point. The steeper trendline served to mark the beginning of the downward move at the end of December 2017. The other trendline potentially could be the support at which Bitcoin bottoms, but it’s too early to tell.
In the previous crash, the trendline coincided with a resistance level, seen in the picture below.
The red line is a TL drawn from previous lower lows, the blue line is previous resistance for Bitcoin. They both coincided with the bottoming which occurred at the beginning of 2015, which Bitcoin briefly went to 160 dollars. The trendline continued to serve as a support level for the growing price of Bitcoin until August 2015, when there was another crash down to 140 dollars. What followed was the largest bullrun for any asset in history.
The truth of the matter is that these support levels and trendlines I’ve drawn for Bitcoin will not be exact foretellings of what is to come in the future. However, they do provide guidance when designing your risk management strategy, a topic which we go very in depth in the Adara Academy.
For example, you could place bids at the lower support line I drew above and hope that prices dropped to 1800. If you get filled, there could be a high chance of a rebound depending on price action.
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