Bitcoin Price: Charting the Path Toward Higher Prices
Bitcoin (BTC) is currently trading at $7490.00, and some pundits have declared outlandish price targets like $1,000,000, while other have stated that Bitcoin is set to crash.
I am returning to provide my insights about the matter because I was fortunate enough to predict in a January 5 publication titled “The Bitcoin Price Bubble Is Far from Over” that Bitcoin was going to easily surge past $4,000.00. Back then it was trading at $1,006.00.
I am focusing on Bitcoin once again because I have reason to believe that the BTC price forecast is on course for a nuclear melt-up. In other words, insanely high prices are completely in question.
Based on my understanding of the price action on the Bitcoin price chart, I think that Bitcoin is going to $60,000.00, which I can argue is actually on the conservative side. This bullish view is generated by using technical analysis, and, if you have read any of my previous publications, this should come as no surprise.
For anyone who has not had the pleasure of reading my explanation before, technical analysis is a method of investment analysis that is based on the notion that momentum drives price, which causes it to trend. Therefore, historical price and volume data can be used to forecast where this trend is heading. I have spend nearly two decades studying and applying this method for the simple reason that, when it is applied correctly, the results are too impressive to dismiss.
Bitcoin Price Forecast
The following Bitcoin price chart illustrates the constructive price action that was responsible for creating my $60,000.00 price objective.
Chart courtesy of TradingView.com
Constructive price action consists of an alternating two-wave structure.
The first wave, an impulse wave, is highlighted in green, and it defines the stage in a bull market when the price makes a relentless move toward higher levels.
The second wave, a consolidation wave, is highlighted in purple and defines the stage in a bullish trend when a price refrains from advancing in order to unwind an overbought condition that was created during the impulse wave that preceded it. This sets the stage for a new impulse wave to develop.
Earlier this year, Bitcoin broke out of its consolidation wave, and a new impulse wave has been in development ever since. This wave structure is evolving as a parabolic blowoff, which is the making of a price bubble. If you do not know what one looks like, I suggest taking a look at the Dutch Tulip bubble of 1637, because it is a perfect example.
Parabolic blow-offs are characterized by impulse waves that mirror each other in terms of height, using a log-based scale. Under this premise, the impulse wave currently in development can reach a height just shy of $100,000, but I am using $60,000 as my conservative estimate.
My confidence for this outlandish number stems from the chart’s perfection,. It is so perfect that I could easily suggest that perhaps the Bitcoin price is being engineered in order to create a perfect parabolic trend. Regardless, it makes no difference to the outcome, because much higher BTC prices are on the horizon.
An Influential Indicator Worth Watching
The current impulse wave that is in development had been supported by an influential momentum indicator, which is highlighted on the following Bitcoin price chart.
Chart courtesy of TradingView.com
The indicator located in the lower panel of the above chart is the moving average convergence/divergence (MACD). This indicator is used to distinguish whether bullish or bearish momentum is influencing the price action. This indicator is extremely influential because, in order to stage a sustained price advance or for the price to decline, the applicable momentum is required.
A bullish MACD cross was generated in October 2016, and it has remained in bullish alignment as the BTC price continues to drive higher. There have been numerous attempts at a bearish MACD cross, but all attempts thus far have been refuted. The inability to generate a bearish signal is a testament to the inherently bullish strength that is fueling this advance toward higher BTC prices. In actuality, every time a bearish MACD cross was averted, the pace toward higher prices accelerated.
This indicator is worth watching because, as long as it remains in bullish alignment, the accelerated move toward higher prices will continue. The repercussions from this indicator will only be negated when a bearish MACD cross is generated.
A bearish MACD cross would suggest that bearish momentum has finally taken hold, and I would expect quite a sell-off to occur, as a result.
Words of Caution
Cryptocurrencies are in vogue, and the last time I saw anything closely resembling this much euphoria was during the dotcom bubble. Any mention of the word “dotcom” in a news release would send a company’s stock price hurtling higher. The same is occurring now, when the word “blockchain” is mentioned.
This euphoria is is what drives bubbles, and eventually these bubbles burst. What transpired during and after the dotcom bubble is another prime example of the repercussions of a bubble.
I am skeptical about all these cryptocurrencies in their current form, but this doesn’t mean I don’t believe that higher prices are on the horizon. The problem is, once the thrust to the upside is complete, I am fully expecting harsh reality to set in, in which a price of $600.00 BTC is also not out of the question.
So, in order to answer the question in the title of this article, I believe that Bitcoin is destined to reach $60,000. And then, when the bubble bursts, I fully believe that it will fall from grace. I could easily foresee it falling to $600.00 or lower.
The trajectory toward higher Bitcoin prices is well supported by a very influential momentum indicator, and the price action is suggesting that BTC prices can surpass $60,000 in the months ahead. This, of course, would be a momentous feat, but it will also be suggesting that the bubble in cryptocurrencies is reaching a peak.