By CCN Markets: Since achieving a new 2019 high at above $9,000 at most major crypto exchanges, the bitcoin price has dropped to around $7,900 by more than 12 percent against the U.S. dollar.
After a 12 percent pullback, the bitcoin price is still up nearly $2,000 in the past 30 days (source: coinmarketcap.com)
While many technical analysts have warned against the strong possibility of a pullback occurring in the near-term, which remains probable considering the 110 percent year-to-date gain of the dominant crypto asset, one trader says bitcoin is much more bullish than it currently seems.
Why bitcoin is bullish on a macro level
From April to June, the bitcoin price has surged from $4,100 to $9,000 by well over two-fold within a two-month span.
Subsequent to such an abrupt upside movement, a pullback is typically expected given the historical performance of bitcoin.
Throughout the past five years, the bitcoin price has tended to pullback by 30 to 40 percent on average after seeing extended rallies supplemented with strong momentum and volume.
As crypto asset technical analyst Josh Rager said in late May:
Bitcoin had eight 30%+ pullbacks last market uptrend but the average time between each pullback was 98 days BTC had a serious 26.3% pullback on May 17th, which means the next major retrace could be a couple months away.
While we can’t base everything on one historical uptrend we do know that pullbacks will come. But with institutions in the market now & battling for position, we may not see a major pullback (30%) for a while (July or August).
It is unclear whether bitcoin would initiate a large pullback amidst its long awaited recovery since falling to $3,150 at its lowest point in 2018.
Bitcoin is still up substantially against major indicates (source: Charlie Bilello)
But, technical analysts are cautious in calling for a big correction in the tune of 30 percent due to the momentum of the market.
According to a trader known as “Satoshi Flipper” the macro landscape of the crypto market is more positive than it seems. As such, a 30 percent pullback may not occur until bitcoin surpasses key resistance levels in the months to come.
Emphasizing that bitcoin was vulnerable at times to a downside movement but has held up well, the trader said:
Last few days there have been moments when BTC looked like it wanted to shit the bed. But it’s also been holding support levels well. I think BTC is much more bullish than most traders with a bearish bias think. Either way, we’ll be prepared for either direction it goes.
Don’t underplay the halving
Approximately every three years, the Bitcoin blockchain network goes through the so-called block reward halving, an event that decreases the rate in which new BTC is produced by miners that secure the blockchain through processing transactions.
The decline in the production rate of BTC decreases the supply of the asset in the global exchange and over-the-counter (OTC) market, raising its value.
Grayscale, a crypto investment firm with $2 billion in assets under management, said in a research paper that many investors are not aware of the block reward halving of bitcoin, suggesting that the event may not be priced in.
“The halving is close enough that it’s time to start talking about it more seriously, but far enough out in the future that it’s unclear whether it’s priced into the market efficiently. In fact, based on anecdotal conversations with market participants, we were surprised to learn that many of them were not even aware of this event,” Grayscale said.
With halving on the horizon and the general sentiment around the market positive, it is possible that the market does not see as big of a pullback investors anticipate.
