Bitcoin’s Current Market Cycle: Complacency or Disbelief?

Yesterday, the early returns predicted a $28.6 million daily volume — but the announcement at the end of the day showed that volume barely failed to reach an all-time high.

∙ Today's volume so far: 1438 BTC ($12,618,450)
∙ Last traded price: $8,775
∙ Trading day progress: 83%
∙ Current daily Bakktarget™: 1527 BTC ($13,402,948)

— Bakkt Volume Bot (@BakktBot) November 12, 2019

Bakkt’s daily volume was less than $2 million throughout September and October. However, the rapid Bitcoin price increase on October 25 was the likely catalyst for the increased volume. Since then, however, the Bitcoin price has been gradually decreasing while trading in a range. This has caused some people to speculate that, rather than being the beginning of a new trend, this is the top of another correction. Based on the price movement during the previous three Bitcoin market cycles, this does not seem likely. However, one cannot completely reject the possibility. Cryptocurrency trader @coinzada outlined the “Emotional Stages of a Market Cycle” chart while suggesting that we are in the “complacency” stage — and a price decrease will follow. https://twitter.com/coinzada/status/1194012142254612482?s=09 Let’s take a look at the previous Bitcoin market cycles in order to decide where the Bitcoin price is in the current movement.

Bitcoin’s 2011 Correction

After the 2011 correction, the “complacency” stage would have likely been in January 2012. However, volume in January was higher than during the preceding upward move. Also, there was a bullish cross of both the 10- and 20-week moving averages (MA) and the MACD. Longer-term MAs could not be used since there was no data prior to 2011. Afterward, the Bitcoin price continued to increase — invalidating the hypothesis that the market was in the “complacency” stage.

2014 Correction

After the 2014 correction, the Bitcoin price made a low in January 2015 and began to increase. The high reached in October 2016, at the time, could have been seen as the “complacency” high. Similar to the previous move, volume was way higher than during the preceding upward move. This high was combined with a bullish cross in the MACD and, several months later, the 50- and 100-week MAs followed suit. Again, the price continued to increase instead of making another downward move.

Current Movement

In the current movement, the likely “complacency” high was reached in June. Unlike the previous moves, volume was not as high as the preceding upward move. However, a bullish MACD cross has occurred — which has since turned bearish. Also, while the 50- and 100-week MAs are close to making a bullish cross, they have yet to do so. Therefore, while looking at the moves individually, we cannot completely reject the possibility that this is not the “complacency” high and the price will continue to move upward. Looking at the complete Bitcoin price movement, we can see several similarities between this and the previous market cycle. The bottoms in January 2015 and December 2018 are extremely similar. Both were combined with the only oversold RSI values until now and a touch of the 200-week MA. The Bitcoin price has never traded below this MA. For the current high to be “complacency,” it would have to do so. Additionally, the vertical lines represent the dates of halving. Prior to each one, the price consolidated, then began an upward move. If it were to do so, this would not be the complacency high but, rather, the beginning of a new uptrend. The two lows outlined below would represent very similar points in the market cycle. Therefore, while we do not believe this is the “complacency” high, we cannot reject the possibility. A bullish cross between the 50- and 100-week MAs would confirm that this is the beginning of a new uptrend.

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Disclaimer: This article is not trading advice and should not be construed as such. Always consult a trained financial professional before investing in cryptocurrencies, as the market is particularly volatile.

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