Lengthening Bitcoin Cycles and the Monthly MACD [Premium Analysis]

A monthly MACD bullish cross has preceded the 2013 market cycle. When the same occurred in June 2019, it caused many to believe that this was the sign that the price has begun a new market cycle. However, a bearish cross is on the process of transpiring currently — placing the hypothesis in doubt. Cryptocurrency analyst @davthewave posted a picture in which the current MACD movement is compared to that of the bullish market cycle beginning in 2015.

Monthly MACD Cross in the Context of Lengthening Cycles – #BLX TradingView https://t.co/rPawagaoLY

— dave the wave (@davthewave) December 13, 2019

Additionally, he posted a link to a lengthy post in which he discusses the importance of the MACD cross and predicts its relationship to the price movement in the possible bullish market to follow.

Bitcoin’s Monthly MACD Cross

Looking at Bitcoin’s entire price history, we have only had two bullish MACD monthly crosses hitherto.

1. The first one transpired in January 2016, right after the price finished correcting from its 2013 high. Afterward, a two-year-long bullish market cycle transpired — in which the Bitcoin price increased by 5800 percent.
2. After reaching a high of nearly $20,000 in December 2017, the price began the current correction. A bullish MACD cross transpired in June 2016, when the price had just finished an upward move that took it from $4200 in April to $13,764 in June.

However, the Bitcoin price has been decreasing since. This caused a bearish cross in the  MACD to transpire this month. However, we have not had a monthly close yet and will not for two more weeks — so it is possible that the cross is rejected and the price continues moving upward. We believe the importance of this bearish cross is overstated. As stated in the post, the MACD is a lagging indicator. This cross could have occurred due to the rapid change in downside momentum — which was to be expected since the preceding upward move was following an extremely steep slope. Therefore, it should not be read as the beginning of a bearish market cycle, but rather as a correction due to an unsustainable movement preceding it.

Future MACD

Looking at the slope of the MACD, we can see that it was very steep in the 2015 bull market. We do not expect the same thing to occur again. The reason for this is that BTC cycles have been longer but less volatile as time goes by. Thus, the first one was the steepest and shortest while the succeeding ones were more gradual and took longer to materialize. Therefore, we can expect the MACD to follow a more gradual curve. Even if the Bitcoin price were to make a bottom near $6000 and increase until January 2023, when the resistance line is at $220,000, it would only mark a 3000 percent increase, as opposed to 5800 percent in the preceding bull market. However, the MACD line should not drop below 0. That would likely indicate that we are in an extended correction instead of the accumulation phase before the beginning of a new bull market. To conclude, the Bitcoin price is likely in the initial stages of the next market cycle. Since this is expected to be less volatile, the MACD line should reflect that by following a more gradual slope. If the MACD line crosses below 0, it would invalidate the hypothesis of our current positions within the next market cycle.