The price of bitcoin is down by more than 30 percent from its 2019 high. But the cryptocurrency is eyeing a strong bull run in the long-term scenario, says prominent market analyst FlibFlib.
The crypto trader said on Wednesday that he believes bitcoin would jump above its all-time high of $20,000 in early 2020. He stated that the cryptocurrency, in the near-term scenario, is looking to consolidate between a wide range defined by $6,500 as support and $10,000 as resistance. But, given the present active fundamental and technical catalysts, bitcoin would break the consolidation area to the upside, an action that would take the price above the $25,000 level.
What will Drive Bitcoin Up?
FlibFlib reached the bullish conclusion by combining both technical and fundamental factors in the bitcoin market. Fundamentally, the cryptocurrency will likely rise due to halvening, an event that would reduce the supply rate of bitcoins by half. FlibFlib said traders and investors have already digested the scarcity factor. Moreover, “additional fiat onramps and media & political attention and a general aura of interest” is maintaining people’s bullish bias.
“The combination of accelerated demand/interest/awareness, married across a limited supply, creates the perfect storm for bitcoin to achieve much higher prices and the opportunity for them to be achieved rather quickly,” wrote FlibFlib.
On the technical front, the analyst recalled bitcoin’s impressive recovery after establishing bottom near the $3,100 area last December. The cryptocurrency, despite its broader downside correction in July, is still up by 210 percent from bottom. FlibFlib sees a continuation in the downside pattern but believes a sharp pullback to the upside is also imminent – according to Fibonacci Retracement readings.
Investopedia defines Fibonacci Retracement as a set of levels which indicate where possible support and resistance levels are. These levels are 23.6%, 38.2%, 50.0%, 61.8%, and 78.6%, while 0% and 100% define beginning and end of the price cycle, as shown in the chart below.
Example of Fibonacci Retracement Levels: Source: Investopedia
FlibFlib said bitcoin is likely to retest its 61.8% Fibonacci level – which coincides with $7,200 – for a healthy pullback. The cryptocurrency, he argued, creates parabolas, breaks down, and then retraces upon testing the 61.8% level of the parabola. Excerpts:
“We can see that this occurred around the 6k level in 2017, with an engulfing candle on the weekly – we have seen this on the way up in 2019 and it is also at the 61.8% retracement level. This is also the 1.18 off the top. I’m of the view that bitcoinwill correct into the 7ks.”
Risks
FlibFlib also warned about potential “black swan” events that could hamper bitcoin’s bullish sentiment. They include bans in high-profile areas such as the US, Europe, or even in the entire G8 consortium.
“So to summarise, I’m of the view that bitcoin has the infrastructure, the interest, and the fundamentals to go higher, assuming there is no major banning event,”he added.
