Bitcoin, the most valuable cryptocurrency by market capitalization, witnessed a sharp and unexpected rally on April 4, 2019. The positive sentiment spread across the broader crypto market, causing other altcoins to rally in a similar fashion.
Since then, most tokens have stabilized at 15-20 percent higher prices than at the start of April. As a result of this positive market movement, financial analysts have begun making price predictions for the short term.
One such individual, known on Twitter as @100trillionUSD, has predicted that Bitcoin (BTC) will not go below the $2,000 level due to some lesser studied indicators.
Bitcoin Bottom Lies at $2,000?
Why #bitcoin will not drop under $2k:
1) Miners already capitulated (difficulty -25% Nov/Dec)
2) Too close to the Halving (14 months)
3) BTC never dropped below geometric mean ($2750)
4) BTC never dropped below 50% of stock-to-flow model ($5500)
5) RSI bottomed at (42) now rising pic.twitter.com/qJyFvKQcLQ
— plan₿ (@100trillionUSD) March 5, 2019
Relying on technical analysis, the user posted a thorough analysis backed by graphs to state that Bitcoin’s bottom price lies at or above $2,000. 100trillion continued to state that its price will not fall below that level as it will face too strong of a resistance.
Miners who validate transactions on the network are considered to be a key pillar of digital currencies. They maintain records of the public ledger and maintain trust between nodes in the network. The hash rate, also known as network difficulty, increases when more miners lease computational resources to mine new blocks.
During the peak of the crypto rally in November and December 2017, Bitcoin’s difficulty increased rapidly. As the market began declining though, mining became financially unviable for smaller miners. This resulted in the capitulation of small miners and led to the centralization of mining resources.
A study of past Bitcoin prices during the halving of mining rewards shows an interesting pattern. Put simply, the price of the digital currency falls when the next halving is due. Historical data further suggests that the price of Bitcoin retracts by around 40 to 50 percent from its most recent all-time high.
The price curve flattens as the halving approaches and then begins an upwards spiral. With the next Bitcoin mining rewards halving scheduled to occur around May 2020, Bitcoin’s price movement has already begun to exhibit these past patterns.
Technical Indicators Point to Positive Bitcoin Price Movement
In the current rally, Bitcoin has yet to drop below its geometric mean which stands at $2,750. It has also not fallen below 50 percent of its stock to flow model of $5,500. These technical factors point to positive price movements for Bitcoin in the near future.
While a brief selloff may occur, the market has displayed strong resistance near the $4,750 price point. Over the past few days, Bitcoin has managed to surpass $5,200 before falling to $4,900. The upper ceiling of $5,050 needs to be broken by BTC before another rally could be considered.
Do you think Bitcoin prices will fall or rise overall in 2019? Let us know your thoughts in the comments below.
Images courtesy of Twitter, Shutterstock.