Bitcoin enjoyed one of the most volatile weekends in recent history as it saw close to a $1,500 gain over the two days, eventually hitting $7,500 Sunday, its highest level since August 2018. It eventually saw a $765 retracement and bounce to end the weekend around $7,000 after some three and a half months of almost continual uptrend. While the incredible move may have afforded some brief respite for those underwater since the 50% drop back in November, there are reasons to believe that the bear market is not over.
Do We Have Consensus 2019 to Thank?
Bitcoin’s power move comes ahead of Consensus 2019, and as we discussed last week Consensus has previous when it comes to affecting price, in both directions, and some clearly think BTC is following the 2017 playbook:
— Djé Flux (@Crypto_Flux) May 13, 2019
Whether Consensus had any impact on the weekend’s action is debatable, not to mention unprovable. It was more likely a mega short squeeze combined with FOMO once it got past $6,800, perhaps the first such sentiment we’ve seen since 2017, and it showed that Bitcoin can still put the afterburners on when it wants to. After it sailed through the resistance levels on Saturday, Crypto Twitter largely gave up predicting its next moves, with those who had been shorting at every resistance level, of which there were many, getting liquidated time and time again.
Bump and Run
The entire move, from the $6,500 to $3,500 in November to this weekend’s action, seems to fit what’s known as a ‘Bump and Run Reversal’, which, if it plays out, would suggest that a small bounce back up to the $7,500 level will be followed by a return to the dark days of the bear.
If the above scenario does indeed play out, then significant gains may well be possible in altcoins as BTC rests and the money flows into alts. Some big caps took advantage of this over the weekend, with ETH, BCH, and, as we predicted, SIA, among others to make double-digit gains. This pattern is likely to continue, with big caps moving first before the purchasing power trickles down. To this end, players like ADA, TRX, and EOS could be good bets, along with XMR. XRP is the only outlier here as it appears to be weighed down by an invisible force at the moment and can’t be trusted to move with the rest of the market.
Watch out for Big Daddy Bitcoin
As usual, alt movements depend heavily on what BTC does next, and a big movement in either direction will either see money flowing away from alts – either back into the giant in the event of a retest of $7,500 or out of the market entirely and into stablecoins in the case of a continuation of the Bump and Run Reversal pattern. We all know how quickly alts can run, so a fast moving, disciplined trader could make serious money if a window appears.