- December 4, 2020
- Posted by: Tradingshot Articles
- Category: Cryptocurrency
Bitcoin has been consolidating since December 01 when it touched the All Time High (19900 of Dec 2017). On any other occasions, consolidation on such a key Resistance level would be a sign of struggle, hence a bearish signal. However in this study I examine why this may not be the case based on BTC’s Production Cost (PC).
** Then and now **
The essence of this analysis is the comparison between the current and the previous cycle. Last time BTC made contact with its ATH while the Production Cost (red channel) was so close to the price, was of course on February 2017. That was essentially the start of Bitcoin’s hyper aggressive parabolic run that took it to the High of December 2017.
** 2015 – 2017 Cycle **
So what happened then? Just before the ATH hit, the price got detached from the PC. When the test took place, the ATH broke by +15% but then the price got sold back to the PC. That was when it found its last strong support before an amazing +150% rally (from the ATH) in 100 days. I need to point out that this rise created a Big Gap with the PC. During that Cycle, the last time such a Gap occurred was within September 2015 – February 2016, when the price started rising after it set the Bottom of the Bear Cycle.
** Current Cycle **
On the current Cycle, this Big Gap between the price and PC, occurred within May – September 2019. As with 2015-2017, that was also when Bitcoin started rising after it priced the Dec 2018- Jan 2019 Bottom of the Bear Cycle. Side note: see the squeeze on PC that the Halving events created in both Cycles.
So all parameters seem to align once more. If the 20k ATH breaks and then the price pulls back to the Production Cost (PC), then that could be the confirmation we need for the next Big Gap of the Cycle that may take Bitcoin to another +150% rally.
From the ATH that will be around $50000. Can that be realistic within a 100 days period? Feel free to share your work and let me know in the comments section!
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