It’s looking rosy for bitcoin with a major milestone on the horizon, according to a prominent analyst.
By CCN Markets: On CNBC’s Fast Money, Cornerstone Macro’s Carter Worth stated that based on technicals, the trend of bitcoin is seemingly positive and is aiming for 2018 levels.
Year-to-date, the bitcoin price has risen by 146 percent against the U.S. dollar from around $4,000 to $9,150 following a strong start to the second quarter of 2019.
Why technical indicators show bitcoin is on a positive trend
According to Worth, the bottom established by bitcoin in December 2018 at $3,150 has acted as an important support level for the dominant crypto asset.
If key support levels continue to hold up as the trend of bitcoin in recent months of breaking out and consolidating after an initial surge in price sustains, Worth said that the asset is to be played on the long side.
Has it broken above this downtrend line [since late 2017]? of course it has. That is optically very very clear. Let’s put in the bottom line [since 2016]. Is it a wedge from which it just broke out? that is fairly clear too.
So we are back to the days of the bitcoin bug perhaps, I think the important thing is not about how high it can go, it’s that the lows of December are likely to stand as important lows and this is an enduring thing to be played on the long side.
In late 2018, the sudden drop of bitcoin from above $6,000 to the low $3,000 region was amplified due to the sell-off of the asset by investors that feared significant slowdown in the global economy and sold liquid assets like bitcoin as a result.
As the global economy began to show signs of recovery, investors began to acquire the asset through various regulated channels such as Grayscale’s Bitcoin Investment Trust and regulated exchanges in the likes of Coinbase and Gemini, contributing to the upside movement of the asset.
In the upcoming months, with the block reward halving of bitcoin on the horizon in mid-2020 and the mainstream demonstrating an increase in interest towards the crypto market due to the aggressive push of Facebook and major financial institutions including PayPal and Mastercard to introduce a crypto asset called Libra, the sentiment around the market is expected to improve.
Thomas Lee, the co-founder of Fundstrat Global Advisors, suggested that the bitcoin price could potentially increase to $40,000 if it breaches $10,000 in the near term.
To be more clear, we looked at past fear of missing out (FOMO) periods; so when does bitcoin trade within three percent of its historical price levels and that was roughly $10,000 for bitcoin. And looking at the past bull cycles, once you breach that FOMO level, bitcoin typically rallies 200 to 400 percent, said Lee, speaking to Chepicap at the CryptoCompare Digital Asset Summit 2019 in London.
Alternative digital assets not performing so well
Based on the data provided by ATHCoinIndex, most alternative crypto assets and major cryptocurrencies have underperformed against bitcoin and have struggled to recover substantially against the U.S. dollar.
Ethereum and XRP, for instance, the second and third most valuable crypto assets in the global market, are down 81 percent and 87 percent respectively from their all-time highs reached in early 2018.
It remains unclear whether bitcoin would demonstrate a trend of an independent upside price movement throughout the near to medium term. But, at this phase of the market, it seems investors are still cautious on the near term trend of the market.
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