Just like the title says, this is my case for a $3,000 Bitcoin. Lets get right into it.
To explain the chart above, I have plotted out important support (blue) and resistance (red) levels. As you can see, Bitcoin has broken down, out of the triangle pattern and has made another bottom around the $6,000 level. The price has made a slight recovery but it has all been on weak volume, while red days are showing higher trading volume, suggesting that the bears are still in control. Bitcoin may see a small relief rally but I doubt it will last long.
5K is the next support level if the 6K support fails. There is past support/resistance built at this level and will probably provide another bounce, but I don't see this level holding long. Ultimately I think the bottom will come in around $3,000. There are a couple main reasons why I think this will be the magic number. First, 3K was the support level for the crash from 5k, and held the price up with the biggest trading volume day Bitcoin has seen in almost 2 years. And second, 3k would equal around an 85% drop in price from the high, similar to the 87% drop during the 2014 crash. Markets tend to repeat themselves and Bitcoin has been repeating a similar cycle since its creation.
Oh, and it costs about $3,100 to mine a Bitcoin in China, the most popular place to mine. This part isn't as important in my opinion, but does offer some fundamental backing to the price.
CAPITULATION
Ultimately though, I don't believe everyone who will sell has sold quite yet and what I am looking for to identify a real bottom is capitulation. There needs to be a day with massive trading volume and a sharp bounce in price to indicate the sellers have left. This indicator has identified every bottom for the price of Bitcoin in recent years, take a look at the chart below.
Check out that insane volume in 2015 when Bitcoin was bottoming from its previous bull run. It dwarfs any of the trading day prior and perfectly identified the bottom. There are also big volume spikes during the 2017 bull run, matching the corrections and identifying each reversal. I think this will be the most important indicator to watch for to identify the true bottom moving forward.
Let me know what you guys think. Where do you see the Bitcoin price going?
*This is not financial advice. For entertainment and educational purposes only.
Hi @BradMetz
I like the chart and I understand the volume argument and I don't buy the BLACKROCK bounce. The decreasing volume is a major concern for me ( it is half of what it was in February) and unless the price of BTC drops significantly I won't buy in. It took BTC a year, 2015/01/02 to hit the low the first time and then again eight months later, 2015/08/15. Even it the cycle is shorten this time around we will still have to wait several more months.....that's my uneducated guess. I'm not a Financial Analyst. Can you make a chart of where you think BTC will cross the 1200/1000 days EMA? I think only after that we will see the drop? What do you think?
BAM_USD
⋅
@CowboyDan, - this is the link to my chart with the 1000 day EMA in yellow. If I had to guess, I'd say around mid September it would break through. I definitely think there is going to be a sharp drop if/when it does, but we should see a bottom very soon after.
I agree on the cycles too, Bitcoin has always moved in cycles and I doubt this time is different. We most likely need a few more months of healing after this past run. Volume is very concerning to me as well, and although we have seen slightly increased volume in the past few days, the RSI is almost in overbought territory already and the price is approaching resistance at 8K, so I'm skeptical of the move.
Thanks for your insight, it's always great sharing ideas with other traders!
thereisnocoin
⋅
I believe the bottom is 5k not 3k
BAM_USD
⋅
@thereisnocoin, You may be right, that's a popular opinion among other technical analysts. I just can't find any reason why 5k would hold any better than 6k if it breaks.
thereisnocoin
⋅
@BradMetz, because it will stay over 100,000,000,000 market cap, actually $4762 will keep it above 100,000,000,000 also.
WinstonWolf
⋅
@thereisnocoin, Apparently my calculator's retarded because with the current BTC supply and a price of $4762 that puts the marketcap at $81,633,713,594. Unless you're saying that by the time price would get to $4762 there would be a higher supply?
thereisnocoin
⋅
@WinstonWolf, I used total supply, current supply would then be higher price. Good catch
thereisnocoin
⋅
@WinstonWolf, current supply would put the price at 5,830, pretty close to what it dropped to
I like the chart and I understand the volume argument and I don't buy the BLACKROCK bounce. The decreasing volume is a major concern for me ( it is half of what it was in February) and unless the price of BTC drops significantly I won't buy in. It took BTC a year, 2015/01/02 to hit the low the first time and then again eight months later, 2015/08/15. Even it the cycle is shorten this time around we will still have to wait several more months.....that's my uneducated guess. I'm not a Financial Analyst. Can you make a chart of where you think BTC will cross the 1200/1000 days EMA? I think only after that we will see the drop? What do you think?