All eyes are on Bitcoin’s halving on May 12, with many seemingly right in predicting a mini bull run in the lead up to it. But what will happen to the Bitcoin price afterwards? Will it continue to rise higher off the back of the event, or will we see a correction? We analyze the charts to see if a direction and end result is forthcoming.
Continuation of Bullish Momentum Unlikely
For Bitcoin to continue an upward trajectory following the halving it will need to breach a trendline that has been in play since its all time highs in 2017:
For reference, to achieve this by the date of the halving Bitcoin would need to move past $9,075 by May 12 and remain above the trendline. While this is not an impossible turn of events it is extremely unlikely given that Bitcoin has seen already put in a six-week green streak since its crash to $3,800 in March.
To continue on and breach a two and a half year trend line after such a run is likely beyond even Bitcoin’s capabilities.
200-day Moving Average is the Magnet
So what will we likely see instead? Bitcoin is currently butting up against the 20-day moving average (MA) after its month and a half of green, suggesting that we could be about to experience a reversal:
If this is where Bitcoin tops out, which wouldn’t be a surprise seeing as we are getting closer to the halving date, then we need to start looking at how far Bitcoin might fall. If we add the 200-day MA into the mix the picture becomes clearer:
As we outlined in our theory about predicting the next Bitcoin bull run, we can see that the 200MA has acted like a magnet when Bitcoin has turned negative in the past. It would be sensible therefore to look at this region for where we might drop to post-halving.
The 200-day MA theory is backed up when you add in an 18-month trendline (in pink):
As we can see, the trendline has been hugging the 200MA since Bitcoin’s 50% crash in November 2018, reinforcing the suggestion that Bitcoin will experience a pullback to this area, somewhere around $6,250, depending how quickly it drops after the halving pump.
How to Play the Correction
There will be those who will hold their Bitcoin regardless of what happens after the halving, but there will also be those who would like to collect a little more for cheap. Given the scenario we have presented, it would make sense to layer some bids in the $6,000-$7,000 range and then hodl for the moon in 2021.