Bitcoin (BTC) does not have a long trading history unlike the S&P 500 or the Dow Jones Industrial Average. However, it is quite interesting that the ten years of data we have for BTC/USD sometimes offers more clues than the decades of data for other markets. Perhaps this is because markets today are moving at a significantly faster pace and things that used to happen in years and months are now happening in weeks and days. If we look at the ten years of trading data that we have for Bitcoin (BTC), we can see that we have only had one other bear market which was during 2014-15. When Bitcoin (BTC) entered a bear market in the beginning of 2018, it was not clear if it was really going to be a bear market.
A lot of analysts and investors picked up the trading data for Bitcoin (BTC) leading up to 2018 and they divided it into different segments. Based on that, they had different opinions as to what segment of the previous fractal is going to repeat this time. Very few people in this market actually believed that we are going to see Bitcoin (BTC) repeat the exact same pattern as in 2014-15. This is because we have not seen other major markets correct in this way except during a financial crisis. The future outlook for BTC/USD was very bullish and the US Dollar (USD) was in a tough spot which it still is today but back then investors believed Bitcoin (BTC) would be a good hedge against the upcoming crisis.
Now, the truth of the matter is that a lot of people overestimated Bitcoin (BTC). Many believed that the price would not correct in a pump and dump manner but it did because it is a very small market compared to the stock market. This recent bear market for BTC/USD is a very healthy development in the grand scheme of things as it will allow strong hands to take the price to a new all-time high from current levels. However, short term; it has crushed the hopes of many new investors who wanted to get into cryptocurrencies. For those that are getting into the game now, the current sideways movement we see on the daily chart is nothing compared to what lies ahead. It is going to be a very long wait. In fact, the price is going to consistently trade in a very narrow range for a long time.
The BTC/USD daily chart does show that the price is ready to break out to the upside having just formed a bullish pennant. However, soon after it reaches a local top, it is going to find a local bottom and then it is going to bounce back and forth in that range for the remainder of 2019. This will be the time when the media begins to talk about Bitcoin (BTC) and the Tulip Mania once again. The large number of young people that flocked to the crypto market in the hopes of changing their lives will now be on the lookout will lose all hope and avoid Bitcoin (BTC) or anything that has to do with cryptocurrencies. However, in the meantime, something interesting is going to happen which will shift the institutional interest towards cryptocurrencies and once again institutions will lead the rally just before the real adoption.
The chart that we see above is the weekly chart for Dow Jones Industrial Average. If we look at this chart, we can clearly see that the DJI has traded atop a strong trend line that has remained intact since the beginning of the rally in 2009 after the previous financial crisis. However, there is a very interesting pattern to note. If we look at the period between 2009 and 2016, we can see that the price rallied quite aggressively, but when it touched the trend line and began the next rally it was not as exuberant. In fact, we can clearly see that in the beginning of 2018 there was a strong sell pressure which led to an ultimate retest of the trend line in December 2018.
Now, no matter what the mainstream media says, all of these major financial institutions know quite well that the stock market has run out of juice. There is no more money to be made. Even if there is still some room for a rally, it is not worth the risk. As the next financial crisis draws closer, a lot of these institutions are going to want to get out of the stock market and officially get into cryptocurrencies. Make no mistake; these people are already busy accumulating cryptocurrencies. They just do not want to announce it yet as they are not done saying goodbye to the stock market because the majority of their money is stuck in there.
The interesting part is that the next financial crisis is not going to be just a stock market prices where investors will liquidate their positions or sell their stocks and put money in the bank. It is going to be a lot different and there is a strong probability that the US Dollar (USD) will not be a global reserve currency after the crisis. So, Bitcoin (BTC) may continue to trade sideways for the next year or two but it should be taken as an opportunity to accumulate, not as a sign of loss of interest in Bitcoin (BTC).
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