The 2018 Bitcoin selloff that culminated in the mid-November crash is drawing parallels to that of previous years, which has one chart watcher wondering if the disastrous year has been put to bed.
Much like the 2014–2015 bear market, losses for Bitcoin have surpassed 80%, but of more interest is how the 2014–2015 bottom ended. In the first two weeks of 2015, Bitcoin fell 43% to $178 before launching its recovery. In the two weeks ending Nov. 25 of this year, Bitcoin lost 45% of its value.
“In contrast to bounces that have developed through 2018, weekly RSI [relative strength index] is now at levels not seen since BTC’s last bear market low in early 2015 and BTC is showing very early evidence of responding to its long-term uptrend after three major downside moves through 2018,” wrote Rob Sluymer, technical strategist at Fundstrat Global Advisors.
Sluymer’s colleague Tom Lee, managing partner at Fundstrat, at one stage predicted Bitcoin would reach $25,000 by year-end, before dropping his target to $15,000. But if history does repeat itself, Lee may be correct, but a few months early: In the six months following the 2015 low, Bitcoin oscillated in a tight trading range before breaking out and staging a monster bull run, culminating in a 1,000% surge in 2017 to an all-time high near $20,000.
But others need more convincing. Jani Ziedins of the CrackedMarket blog, who correctly predicted the Bitcoin selloff from above $8,000, expects the bounce off $3,500 to be short-lived.
“Most likely this relief rally will carry us back above $5k over the next week or two,” he said.
“But this is nothing more than a dead-cat bounce and Bitcoin is still not investible for the long term.”
If recent gains aren’t merely a dead-cat bounce — how traders describe a small, brief recovery before the decline continues — and Bitcoin instead at least stabilizes, expect the crypto crew to be in full voice come the new year, all thanks to something the early adopters have seen before.
“Our expectation is that BTC is in the very early stages of establishing a multi-quarter bottoming process that is likely to extend well into mid-2019,” Sluymer wrote.
But he did add that it’s premature to say the bottom is in.