After waves of negative news being priced in and the $3,000 top $3,500 support range has held well, Bitcoin seems poised for a end-of-year rally for December 2018. We at Classiarius have studied charts, volumes and interviewed a short list of traders and investors, some who are uber-bearish and calling for $1,800 to trade, and finally conducted some In-house analysis – we think this recent sell-off has finished its price searching phase. So 2019 might start with a crypto-rally that lasts until March.
How did we get here?
This benchmark digital coin trading in a tight range from June to November, about 80 percent of that period trading in a $6,100 to $6,600 range, Bitcoin suffered capitulation selling in mid-November that breached the $6,000 level and quirky approached the $3,000 level. If history serves as a guide, Bitcoin could rally between 20 and 30 percent in the next two weeks as new funds flow into the market. We do not give trade ideas but do like to point out trades when they present themselves.
This week alone, Bitcoin rallied from the start and overnight rallied another 10% after the November and early December meltdown that damaged the confidence of a long list of investors. Let’s keep in mind that there was carnage on the street in US stocks as well as crypto, with the stock pain far more severe. This jump from the $3,000 floor was a combination of short-covering and new longs with the shorts being the dominant group. Note that the three day gain this week was 22 percent but since January this coin is down over 80 percent – the third 80 percent sell-off since 2010.
Retail investors are again active but they are not the expected drivers of a possible 2019 rally. Many investors are looking at regulators and their increased oversight that increased in 2018 and may pay dividends in 2019. After hundreds of ICOs were forced to close shop in 2018, the market may have seen enough “house cleaning” to encourage stable and trusted institutional investors to increase activity.
Despite speculative money still dominating this market, there were signs of institutional money flowing into Bitcoin in the past 72 hours. This could be the key bit of information for fate end of 2018 and the start of 2019.
Bitcoin could trend higher in the coming weeks and months.