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Crypto Winter v. 2.0: When Can We Expect Warming?

20:30 20/03/2019
Or Brief History Of Cryptocurrency Bearish Markets

We have already puzzled out what happened to the market during cryptocurrency crises in past years. Today we'll talk about the current market situation and bitcoin price forecast for the future. Market participants as usual have different views when it comes to BTC price outlook for a couple of years ahead. The bearish trend won’t last forever anyway, so the only question is how deep the market will fall and what peaks it'll reach next time. Everyone agrees with the fact that bitcoin rate will increase someday — except for obvious crypto skeptics.

 

The news that the crypto winter will be over soon has been grabbing headlines since the beginning of 2019. But we tend to believe that’s not entirely true. The market hasn't yet reached the bottom, thus crypto holders should remain patient. Although it's much easier said than done, as we're talking about years of waiting. But keep your head up: if this bitcoin price forecast works well, holders' patience will be paid off with a really explosive market growth.

 

Why is the crypto winter so long?

 

Bloomberg Intelligence analyst Michael McGlon claims that the current crypto winter is nothing more than a usual market correction, which will be continued. According to the Bloomberg Crypto Outlook published in March 2019, now the market is at an early stage of a steady bearish trend — the longest in the history of cryptocurrencies. This means that the BTC price hasn't yet reached its lowest price limit.

 

This is the typical case of a cyclical correction, but there are factors that impede a quick price leveling witnessed during preceding crises. Let's see how long did it take bitcoin to recover after last-time losses:

 

  • After the sharp jump to $30 in June 2011 and the following drop, it took bitcoin 20 months to catch up and exceed the previous record.
  • In December 2013, when the first crypto winter began and bitcoin fell from the all-time high of $1000, it took it 38 months to reach the peak of $20,000 in January 2017.

 

It would be natural to expect that the market needs even more time to recover this time. Moreover, the number of crypto traders, investors and just interested people increased many times compared to 2013 and even more so to 2011. Particularly important is that the number of speculators increased as well, and really big players, also known as “whales”, appeared. While some of them have already entered the market, others are waiting for the most favorable moment to do this. They have the power and opportunity to approach this moment by manipulating bitcoin price.

 

Analyzing it, or market growth prospects

 

In order to assess the potential prospects for BTC price rise, we should turn to technical analysis methods. While the crypto market is relatively young, there are some patterns that are already noticeable at long intervals — at least a year. Now we wonder how the price correlates with moving averages (MA) amid periods of crisis.

 

A moving average is a type of technical analysis methods; it’s an indicator that reflects changes in an average asset price over a certain period.

 

The chart below shows moving averages for 100, 200, and 400 days (yellow lines, from top to bottom — MA-100, MA-200, and MA-400). Let's see how bitcoin performed during the 2015 crisis:

 

  • The price was below three moving averages during the first crypto winter.
  • A stable price increase became noticeable only after the chart had crossed all three yellow lines.
  • There were breaks of MA-100 and MA-200 with unsuccessful attempts to approach MA-400.

Crypto Winter

Now let's have a look at the second chart that shows BTC price changes in 2018-2019.

 

  • In the summer of 2018, the price fluctuated and fell below the moving averages. This can be considered as a sign of a sharp fall in November.
  • In February and March 2019, the price approached MA-100. It may soon break it, but MA-200 is still far away.
  • It looks like the price will fall further to the conditional bottom.

 

All of these confirm the opinions of those who claim that the crypto winter is a long way off the final stage. It seems that the bearish trend is in full spate.

We can make a conclusion, basing on the presented market dynamics: while the price is far from breaking MA-200 and even more so MA-400, it's too early to talk about the market reversal. This is consistent with another impact factor — the upcoming halving of block mining reward in the Bitcoin network scheduled for May 24, 2020. Even though that's a long way off, it's necessary to take it into account already now.

 

There is a chart below that shows how the price of the main cryptocurrency changed before reward halving last times. As you can see, the price started increasing shortly before the day “X”. While we have more than a year to go before this date, there is no hope of global trend movement.

Most likely, we shouldn't expect a stable upward movement at least until the autumn of 2019. Of course, this is just a forecast of the further bitcoin price, or one of scenarios, but it's quite possible. Since bitcoin emission is limited, its price directly depends on supply and demand. At some point there will be a shortage of coins that will lead the price up.

 

Halving is a reminder that the number of BTC coins is limited, but speculations of big players have a great impact on the market, too. If you're not a market “whale”, all that remains is to be patient and wait for the price to go up.

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