Bitcoin has cooled off considerably since its parabolic move from $4,100 in April to $13,900 in May. With the parabola now well and truly broken, what does the rest of 2019 hold for Bitcoin? We look at three options.
Option 1 – Bear Market
If this is an actual bear market, reminiscent of what we saw in 2014/15 and 2018, then, as the below charts show, we can expect something along the lines of an 80-85% correction from local highs followed by a period of consolidation before another recovery. This would take us down to the region of $2,000-$2,800 over a period of months before stabilizing and starting a recovery in mid-2020.
The problem with this theory is that corrections of this magnitude have historically only come about after upward moves of a similar nature – 2013-2015 saw a 6,500% increase in the price of Bitcoin, while 2016-2017 saw a 5,528% rise. 2019 has so far only seen a 350% rise, meaning we haven’t experienced a big enough rise to warrant a correction on this scale yet.
Option 2 – Mini Bear Market
This theory suggests that we have a little more downside to go before quickly resuming an uptrend – essentially a compressed bear market. Extremely strong support exists in the $7,200 area and into the $6,000s, meaning that we are very unlikely to remain under these levels for any great period of time, if we even get that far. A mini bear market would look something like this:
Option 3 – Resumption of Parabolic Run
There is an outside chance that this is just a temporary pause before the resumption of a parabolic run-up. No one was able to predict the parabolic run to $13,900 this year, with the phenomenon only identifiable once it is happening. While some can predict the top of a parabola in advance, many have no choice but to react as it develops, although as a guide a repeat of the Feb-June 2019 parabola would see us topping out at around $20,000. Having recently experienced and broken a parabola however, it is extremely unlikely that Bitcoin would have the strength to start another one so soon, except perhaps in the wake of huge news like a Bitcoin ETF.
Mini Bear Market More Likely
Given Bitcoin’s recent price action and the fact that the U.S. is currently discussing tough regulations on cryptocurrencies across the board, it is unlikely that another parabolic rise is imminent. However, with the likes of Bakkt, Fidelity, and the 2020 halving on the horizon, a full-on bear market is also likely too extreme. Due to these reasons we feel that option 2, a mini bear market that will last for much of the remainder of 2019, is on the cards, before the price kicks on again in early 2020 at the latest, eclipsing all-time highs by the halving in May 2020 before enduring a proper bear market once more.
