Volatility in the cryptocurrency markets have been a complete drag this month. Luckily, the quadrennial Bitcoin halving takes place in 16 days, on May 12 and should provide the next macro move. As the Bitcoin halving approaches, speculation on the halving aftermath is going to ramp up. Knowing this, it is important to differentiate between actual fundamental news and shilling. Today, on Macro Thoughts, we review Bitcoin.
Who Needs Strength?
We begin today with the weekly view on Bitcoin. On the charts below I am focusing on the differences in market structure in relation to the previous two Bitcoin halvings that took place in November 2012 and July 2016. I highlighted the approximate having dates in red.
At around each halving Bitcoin had established three specific market traits: higher lows, higher highs and RSI had been reestablished in bull market territory.
Looking at the chart above, you can see that a clear trend had been established in 2012 and 2016 along with at least one higher low and one higher high. It is important not to get hung up on the number of higher lows and higher highs established. No market is 100 percent identical.
Fast forward to the current Bitcoin price structure. Above, you can see that a higher low has potentially been established. However, unlike 2012 and 2016 there is a lower high. What does this tell me? To look at market strength to get more insight.
I like using RSI because it provides a clean picture of the strength and weakness of a market and for some assets you can clearly see how RSI levels differ within a bull market and bear market. You can see examples of what I am referring to below.
During the 2012 and 2016 halving periods, Bitcoin's RSI was reestablished in bull market territory, and had been for some time. Furthermore, you can see how during the period leading up to halving, the bull market RSI support level of around 52 was retested and respected.
On the chart above you can see that current Bitcoin RSI has failed to reclaim historical bull market territory. This finding supoorts the evidence of lower highs. Although currently at a bearish posture, there is still two weeks left prior to halving. This is plenty of time for the bulls to reclaim a bullish RSI level. Until then, the combination of lower highs and RSI should be a concerning. Bias: Bearish.
Place your bets...
The cryptocurrency markets are still very young and immature. It becomes even more evident around the halving period. The expectation is that Bitcoin enters a new cyclical bull market after the halving. What if this isn't the case yet? From technical analysis perspective there are strong arguments against any bullish case. Place your bets carefully in the coming weeks!
Who Needs Strength?
We begin today with the weekly view on Bitcoin. On the charts below I am focusing on the differences in market structure in relation to the previous two Bitcoin halvings that took place in November 2012 and July 2016. I highlighted the approximate having dates in red.
At around each halving Bitcoin had established three specific market traits: higher lows, higher highs and RSI had been reestablished in bull market territory.
Looking at the chart above, you can see that a clear trend had been established in 2012 and 2016 along with at least one higher low and one higher high. It is important not to get hung up on the number of higher lows and higher highs established. No market is 100 percent identical.
Fast forward to the current Bitcoin price structure. Above, you can see that a higher low has potentially been established. However, unlike 2012 and 2016 there is a lower high. What does this tell me? To look at market strength to get more insight.
I like using RSI because it provides a clean picture of the strength and weakness of a market and for some assets you can clearly see how RSI levels differ within a bull market and bear market. You can see examples of what I am referring to below.
During the 2012 and 2016 halving periods, Bitcoin's RSI was reestablished in bull market territory, and had been for some time. Furthermore, you can see how during the period leading up to halving, the bull market RSI support level of around 52 was retested and respected.
On the chart above you can see that current Bitcoin RSI has failed to reclaim historical bull market territory. This finding supoorts the evidence of lower highs. Although currently at a bearish posture, there is still two weeks left prior to halving. This is plenty of time for the bulls to reclaim a bullish RSI level. Until then, the combination of lower highs and RSI should be a concerning. Bias: Bearish.
Place your bets...
The cryptocurrency markets are still very young and immature. It becomes even more evident around the halving period. The expectation is that Bitcoin enters a new cyclical bull market after the halving. What if this isn't the case yet? From technical analysis perspective there are strong arguments against any bullish case. Place your bets carefully in the coming weeks!