July 29, 2019, | AtoZ Markets - From the last one week, we have seen fluctuations in the prices of Bitcoin and its falling down again. Bitcoin that started the week at the rate of $10,600 is going down like a falling meteor.
Bitcoin trading opened up at the price of $10,600 mark but we saw a major dip in the price on Tuesday and Wednesday and it came down to $9400 zone. Many investors and analysts started predicting that Bitcoin price is going for the bearish market and it will drop down to $8500-$9000 but instead it formed the “W” pattern again and went up to $10200.
Despite huge corrections in hands, analysts see buying bitcoin from here is a huge opportunity for investors. In this article, we'll look at the reasons why analysts are bullish on Bitcoin despite the major correction.
Bitcoin price might break 2019 highs soon
As per AtoZMarkets' Crypto Market Analyst, Sanmi Adeagbo, Bitcoin price is currently hanging between $11,100 top and $9,100 low. A break below the $9,100 low will see the bearish correction continue to $8,500 and maybe $7,200. On the other hand, if the bulls could push above $11,100, the bullish trend might just resume and break above the $13,900 2019 high.
According to Sanmi's Elliot wave analysis, despite the major dip, a bullish impulse wave from $9,100 to break above the wave (2) channel will signal the end of the bearish correction and the development of wave (3). Wave (3) will aim to break above the $19,800 all-time high.
The untouched supply tends to mirror price movements
In a recent bitcoin analysis report by Coin Metrics' state of the network which has analyzed the amount of bitcoin untouched for at least 5 years is at an all-time high. This clearly signals that bitcoin has been increasingly becoming a store of value instead of a medium of exchange. This is highly important for Bitcoin.
As of 19th July 2019, there was 3,847,859 bitcoin that was sitting in the wallet for 5 years.
The graph below shows that bitcoin has been untouched for at least 180 days, 1 year and 2 years in terms of BTCUSD.
Miner capitulation and halving accumulation
According to famous quantitative analyst PlanB, Bitcoin could touch the $370k level in the future.
PlanB calls the phenomenon “miner capitulation.” In a broader market, crypto geeks call it bubble burst, which means a massive supply of BTC becomes available at cheaper prices. The giant traders buy and pump the market once again, blowing another bubble. Now, the miners are looking at a higher bitcoin rate and turned on their mining rigs. As a result, the hash rate and difficulty reached a higher level and everything comes back to normal.
The recent bitcoin price action shows the same pumping scenario. Bitcoin price formed a bottom in last December, after which its price has surged by more than 200% already.
According to analyst PlanB, “We saw difficulty bottoms (miner capitulation) in Dec 2011 ($4.6), May 2015 ($230) and Dec 2018 ($3,896). Price continues to rise from these bottoms until ATH around 100x […] Implying a continuing uptrend until $370,000 ATH.”
It is absolutely true that Bitcoin is scarcer than gold. Bitcoin's supply rate keeps getting reduced by half periodically. This event is known as halving. And so far the history has favored such dynamics.
He also said: “The predicted market value for bitcoin after May 2020 halving is $1 trillion, which translates in a bitcoin price of $55,000.”
The positive momentum might turn miners into holders, for they speculate a reduction in bitcoin supply to be bullish against a potential increase in demand. The phenomenon could support a "7-Digit" valuation for the bitcoin.
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