Lower Bitcoin prices are probably necessary and altcoins would benefit.


Bitcoin consolidating, flagging, but under threat

Bitcoin has been consolidating over the past four days, with some definite fake-outs higher and lower. Today’s (July 22nd, 2019) trading does appear to indicate some lower moves and a continuation to the downside. There has not been any follow-through buying since the big rallies on the 17th and 18th of July. Instead, there has been a clear continuation pattern developing on the daily chart – a Bull Flag. But this bull flag has quite a steep angle to it and this means the lower part of the flag is much further down than where we are currently trading. The closest high-volume node is where many current traders do not want Bitcoin to go (but investors certainly would not complain), the $8,000 value area.


On the image above, we see three Fibonacci retracement levels, the 0.382 (38.2%), 0.5 (50%) and 0.618 (61.8%). These Fibonacci retracement levels differ from normal levels because these retracement levels are using logarithmic calculations. WD Gann and many other of the original technical analysts frequently discussed the importance and frequency of long and short-term trends retracing 50% of their move. For Bitcoin, a 50% move would mean a drop down to $5767. But a pullback or retracement of 50% is not a certainty, and with Bitcoin’s recent move out of the bear market, I don’t think we should expect so deep a retracement.

I believe that prices will drop down to at least the 38.2% Fibonacci level. This is also one of the primary high-volume nodes for Bitcoin as well as the most recent. This would also more than likely fulfill the end of the first corrective wave before continuing higher. I do look forward to this drop for many reasons, but my primary hope is due to one reason: altcoins. The entire altcoin market continues to experience a bear market – a bear market that has lasted all of 2018 and is now well into half of 2019. For over one and half years, the altcoin market has continued to generate new major lows against Bitcoin and the dollar. A good number of those altcoins have shown some evidence of probable final lows and certainly, a good number of altcoins have clear consolidation zones.

There has been a number of weeks over the past couple months that have hinted at a rotation of capital in this market and the beginning of a new altcoin bull market. A great many pundits and analysts have also seen this. And a drop-down to the 8k value area is an essential move in order to see some massive drives up in the altcoin market. We need to see a good month or so of large 20+% moves every week in order to bring some equilibrium back to the Bitcoin/Altcoin markets.