Is Bitcoin Poised for a Bull Run?
Bitcoin is back above $5,000 with plenty of momentum.
In fact, it last traded at $5,212 and could refill its bearish gap around $6,100, near-term.
After a poor outing in 2018, the coin is starting to show signs of life after a Bitcoin whale bought nearly $100 million of BTC in recent weeks. And, if you take a look at the number of Google searches for BTC, they’re spiking to levels last since in November 2018.
Even better, the worst may be over for the coin, says Fundstrat’s Tom Lee. In fact, he views the BTC break above the 200-day moving average as a bullish sign.
“Based on bitcoin's trading history, a move above the 200-day moving average for bitcoin is meaningful statistically,' Fundstrat said, as quoted by Forbes. 'When bitcoin is above its 200-day moving average its win-ratio is 80% compared to a mere 36% when it is below its 200-day. Six-month forward returns average 193% compared to a measly 10% when below its 200-day moving average—hence, being above the 200-day moving average is a big deal.'
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At the same time, we may be seeing the initial innings of FOMO, or the fear of missing out.
For those of you unfamiliar with the term, FOMO simply refers to the fear of missing out on a potentially profitable opportunity. No one wants to be left behind. Fear of missing out will make investments attractive, says billionaire Michael Novogratz.
After breaking above heavy resistance dating back to December 2018, the coin could refill its bearish gap around $6,100, near-term. Keep an eye on it. We could be about to witness quite a rally in the cryptocurrency.
However, we must also be aware of a potential correction.
While the bulls are excited about the break higher, we could see a near-term correction after a big move for the coin. In fact, if you look aa six-month chart of BTC, notice what happens up to 80% of the time when the upper Bollinger Band (2,20) is touched or penetrated.
We typically see a short-lived reversal.
We can confirm what the Bollinger Band are telling us with current over-extensions on relative strength (RSI) and Full Stochastics.
It’ll be interesting to see what happens next for BTC.
But it’ll pay to be cautious if you’re thinking about buying after a big run now.
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