Bitcoin Trading In $300 Range as Trend Evaporates, Breakout Likely Soon - Price Analysis

  • Short term: breakout play up or down likely soon, no trend currently
  • Long term: uptrend still intact but that could change quickly if things go south

On the surface, Bitcoin (BTC) looks downright boring today, trading on low volume within a very narrow range. But in fact, the leading crypto has been squeezed into an extremely tight corner of a pattern, and volatility could swiftly return at any moment.

We start with a 6-hour chart, below, showing the 200 exponential moving average (EMA). This average has been an inflection point for Bitcoin’s price since mid-August (and even before). And on the August 26 fakeout out of this pattern, price was quickly sold back below the 200.

Breakout likely at any timeBTC chart by TradingView

The blue uptrend band is important, as it mostly corresponds to Bitcoin’s general uptrend for several months. Breaking below it, which is here a possibility, would have us looking at Bitcoin’s prospects for 2019 with concern. Finally, we see that a breakout would likely have an eventual target of about $11,200, where the larger structure’s downtrend line lies.

We can see on the above chart that volume is also squeezing into a diminishing point as a consolidation, corroborating the idea that price will break soon. Sort term indicators, such as on the 4-hour, are as listless and mute as price action is, and give us little material to estimate a breakout direction.

Instead, we might only grasp onto the larger trend, which is mostly still bullish but with some worrying signs. For example, on the 3-day chart below, we can see that the “fan” of EMAs has been unfurled since May of this year.

EMA fan could collapseBTC chart by TradingView

But dangerously, we see that the 9 EMA is at real risk of crossing over the 13 EMA. The same scare passed in late July, but the fan has been compressing since then.

Generally, this looks like a huge, 2.5-month bull flag, and this would suggest that BTC stays in its consolidation pattern. That would mean we would expect it to break up in the very near future, and have another attempt at the top of the larger pattern at $11.2k. That seems like about the best we have to go on at this time.

Hidden bull div, but plenty of lower highs tooBTC chart by TradingView

If we look at the 3-day indicators, trying to get anything we can, one can glean a hidden bullish divergence between now and June. This suggests that the general large uptrend will continue. Down on the MACD/histogram, we see that the MACD is careening back toward the centerline. But the histogram seems to have stabilized and is arcing up, and could form a higher low here.

None of this is enough to “predict” that price will break up in the coming hours or days. The larger uptrend is still intact, although definitely flagging. Perhaps the apathy in the markets will come to a close, as the summer months conclude.

The views and opinions expressed here do not reflect those of CryptoGlobe.com and do not constitute financial advice. Always do your own research.

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Head of Capriole Investments: Bitcoin to Reach $100K Within Next 5 Years

Siamak Masnavi

On Sunday (February 16), Charles Edwards, Co-Founder of digital asset management firm Capriole Investments said that, based on Bitcoin's Energy Value, it is likely that the BTC price will reach $100K within the next five years.

As Edwards explained in a blog post published on 13 December 2019, he believes that "Bitcoin’s fair value is a function of energy input, supply growth rate and a constant representing the fiat dollar value of energy," which led him to come up with the following equation that shows how we can determine Bitcoin's Energy Value (V):

V = (Energy Input / Supply Growth Rate) * f

where 

  • "Energy Input (unit: Watts) = Hash Rate (GH/s) * Mining Energy Efficiency (J/GH)"
  • "Supply Growth Rate (unit: s-1) = Annual increase in circulating Bitcoins, equivalent to the inverse of Stock-to-Flow. Calculated as the annual rate (unit: year-1) of change in circulating Bitcoins and then converted to seconds"
  • "Fiat Factor ($USD/Joule) = A constant conversion factor to allow for the fiat USD value of energy"

Edwards then simplied this equation further (since "all units of hash rate and supply rate cancel out"), which meant that he was able to conclude that "he fair value of Bitcoin (V) can be represented as a function of the Joules of energy spent to produce it."

Then, yesterday (February 16), Edwards explained via a tweetstorm that since Bitcoin's Energy Value depends on Hash Rate (HR) and Mining Hardware Efficiency, by predicting what the values of these two variables will be in 2025, we can predict what the Energy Value will be at that time: 

Edwards expects the annual hash rate growth rate to drop to around 20% by 2025: 

He expects the annual rate of improvement in mining hardware efficiency to drop to around 16% by 2025:

He then says that this means a fair value of $100K for Bitcoin by 2025:

Interestingly, he also points out that this $100K forecast is a conservative estimate:

 

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