Bitcoin’s market valuation has already made some surprising moves in 2019, outperforming both the NASDAQ Composite and S&P 500 (on a YTD basis) by a wide margin. However, an inability to hold support at key technical regions would suggest this year’s bull trend hasn’t yet been validated.
BITCOIN'S LINE IN THE SAND
Since the beginning of the year, BTC/USD has generated gains of 172%, outpacing the returns of both the NASDAQ Composite (at +16.6%) and the S&P 500 (at +13.2%) over the same period.
However, technical indicators suggest crypto investors might consider taking gains on portions of their positions if bitcoin trend reversals begin to unfold. A recent tweet from Peter Brandt highlighted the bullish nature of this year’s bitcoin action, citing momentum readings which placed the rally within the context of price moves visible from 2015-2017.
Brandt’s trend model places a virtual “line in the sand” just below psychological levels at $9,000, which has worked previously as a support-turned-resistance level that propelled BTC prices into five-digit territory.
More importantly, the latest declines have sent prices through the 50-day exponential moving average (EMA), which is a metric that tends to be watched more closely by the market’s daytraders. As we can see, this is the third time BTC/USD has fallen through the 50-day EMA since March of this year. The lower highs posted during the June 28th – August 6th rally suggest a near-term top may have formed in BTC/USD.
Ultimately, this short-term bearish momentum could force a test of Brandt’s critical price levels. The rapidly ascending 200-day EMA has the potential to work as an additionally supportive factor for BTC long positions. However, markets would likely need to see a period of consolidation in order to price/time metrics to align in ways that keep valuations elevated above the $9,000 level.
POTENTIAL FOR VOLATILITY
Given bitcoin’s recent move to close at its highest weekly candle in over a year, any downside breaks may have the potential to take many crypto traders by surprise. Turbulence in both bond markets and fiat currencies has created summer volatility levels that are far outside of the historical averages.
Options traders are currently betting that even more volatility is likely to flood the market, so it may not be a significant surprise to see similar expectations start to creep into the price action of bitcoin and other cryptos in the near-term.
Where do you expect BTC/USD valuations to travel next? Add your thoughts in the comments below!