Bitcoin (BTC): New Scenarios

April 26, 2019 / by Bill Noble

Post NY AG news, we are now looking at a variety of new chart scenarios.

Gann work (not shown) hints that Bitcoin (BTC) can be stable if it holds above $5,000 over the next two weeks.

If Bitcoin (BTC) cannot hold above $5,000, we see two possible scenarios. The first is an upward sloping zig-zag consolidation. In this case, Bitcoin (BTC) would drop to $4,500 and then bounce and attack the top of the range from last year at $6,000.

The second scenario is a repeat of the bull trap of 2015. Right now, there is a clear case to focus on this scenario.

Bitcoin (BTC) is failing at its 50-week exponential moving average (Figure 1).  

 class= Figure 1

This failure at the exponential 50-week moving average mirrors exactly what happened in 2015 (Figure 2). Back then, the 2014 bear market ended when Bitcoin (BTC) turned and went higher during the first half of 2015. That early rally in 2015 turned out to be a trap. In that case, Bitcoin (BTC) failed at the 50-week moving average and then dropped for seven weeks. That drop retraced most of the gains from 2015.

 class= Figure 2

If the 2015 scenario repeats, then Bitcoin (BTC) could go to the 76% retracement of its recent up move at $3,723 (Figure 3).

 class= Figure 3

Bottom Line: If $5,000 acts as support in Bitcoin (BTC), that would be encouraging. Government regulation can be harmful. In contrast, law enforcement agencies eliminating potential fraud from a market is net positive. So this decline could be just a simply corrective dip.

Conversely, if this is a repeat of 2015, all bullish bets are off. Bitcoin (BTC) could be at the mercy of miners who will sell until Bitcoin (BTC) reaches the cost of production. Recent research on our part hints the production could be just below $4,000.

The Crypto.IQ Trading Desk sold the high uptick in Bitcoin (BTC) before the huge drop off the NY AG news. It was like they were psychic.

Join me there.