Trading Bitcoin: We Have Liftoff

We Have Liftoff

We have liftoff: Very few assets ever experience a parabolic increase the way Bitcoin has throughout the course of 2019. As of now, Bitcoin is up 253% since Jan. 1st, 2019 (Bitstamp). Some have compared this kind of price action to the NASDAQ in the early 2000s, however, Bitcoin has experienced these vast and profound market cycles faster than any other asset class. While the market is heavily overbought and exuberant, it’s not impossible for price to bubble to $20k.

Daily

Bitcoin is currently on a green 6 of 9 candle and is providing bullish signals for the next three days. Current resistance remains at $13.5k which also aligns with the 0.618 fibonacci level. If this resistance level is broken, bullish momentum has the possibility to increase price to new all-time highs.

4 Hour

Bitcoin’s sequential indicator is on a green 4 and is showing more upside potential in the short-term future. The moving averages have created a perfect golden cross and the technicals are looking strong.

Sentiment

The crypto fear and greed index is currently at 95, which is its highest level ever. If greed begins to decrease, the market will begin to take profit and subsequently lead to a 30-40% pullback. In order to sustain this unprecedented run, Bitcoin’s greed index must remain high. Additionally, Bitcoin tweet data is at the highest level it’s been since Oct. 2018.

Above is a graph of google trend data for the search term ‘bitcoin’. As you can see, google search trends for Bitcoin are at their highest level since the peak of 2017. There’s no question that the market is elated and exuberant. The question is ‘how irrational will this exuberance become? And at what price will the market become fearful?’

Cryptocurrency News

Walmart China recently announced their partnership with the cryptocurrency project Vechain. They are already using Vechain’s technology to track the shipment of food through 23 known products. Walmart China also plans to use Vechain to track over 100 products in the near future.

It is expected that the Walmart China’s traceability system will see traceable fresh meat account for 50% of the total sales of packaged fresh meat, traceable vegetables will account for 40% of the total sales of packaged vegetables, traceable seafood will account for 12.5% of the total sales of seafood by the end of 2020.

The market has noticed and Vechain has pumped as much as 72% after the announcement. From the chart below, you can see the definite price impact Walmart China’s announcement had on Vechain.

It’s important to understand that this isn’t exaggerated hype which we are so accustomed to in crypto. This isn’t Justin Sun announcing a fake McDonalds partnership with TRON, this is a real corporate partnership with real usage. Overall, the public persona of blockchain technology will increase Bitcoin’s adoption & price as society begins to understand why a blockchain has utility.

Conclusion

We have liftoff: The news around Facebook’s Libra and Walmart China has excited the crypto market after a long bear market. Hype will eventually die down as Libra’s progress is slowed by regulatory difficulties, nevertheless it has launched Bitcoin into a parabolic uptrend. Now the bulls are pushing hard into the $13k region.

As we mentioned in yesterday’s update, ‘the trend is your friend’ and the sequential indicator is bullish across a majority of timeframes. Additionally, Bitcoin may be forming a bull flag which, with a measured move, would extrapolate us to a target of $13.5k. This level also has confluence with the 0.618 golden fibonacci level which typically acts as resistance. If a rejection should occur, it would most likely occur at the $13.5k price region. If a rejection does not occur at this level, the next area of resistance is the psychological barrier at $20k.