Will Halving cause a bitcoin dump?

Will Halving cause a bitcoin dump?

By zulonga | Zulonga | 18 Feb 2020


Introduction

Bitcoin started the year following the script I have been projecting since the end of last year after that period of decline where it was quoted in the range of $ 7,000. Upon reaching a resistance level of $ 10,300 (a level that preceded a sharp drop of 11% in one day) it falls again and is currently quoted at $ 9,700.

In this article I aim to bring a detailed analysis bringing some events already covered previously (such as halving) that may affect the price of bitcoin and some future projections, as well as showing my count of the elliot waves of the current movement and the macro count.

Monthly chart

The monthly graph is perhaps the most important in this analysis as it is the graph that has the least noise, giving a clearer view of possible future scenarios based on the past.

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Here we can see the classic 8-period moving average which, as already mentioned in bull market periods, serves as support for the price and in bear markets as resistance, initially we will make it clear that the current bull market is full of events never seen before in bitcoin, such as the sudden death cross suffered at the end of the year that brought that candle that closed below the 8-period moving average on the monthly chart.

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What I believe to have happened at that time was the price falling (three red candles) followed by a support in the moving average and a break followed by a false consolidation below the moving average where, in that same month the test and the rejection (shown in figure as a double bottom, we now close the next month above it and remain above it, however, as usual the ideal would be a test on this 8-period moving average that is currently in each of the $ 8,500 so that we can return to the upward trend.

This 8-period moving average is positioned close to the 200-period moving average on the daily chart also marking close to $ 8,500.

Weekly Chart

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The weekly chart shows us more clearly that this correction up to the $ 8,500 level is close. Initially analyzing only the last two candlesticks we have that the current week has broken the low of last week, something that has not happened since December last year, indicating a bearish signal, at the same time we have the negative crossing of the stochastics in the RSI that indicates this possible reversal faster and the MACD indicating loss of buying power but far from showing that there will be a fall or lateralization that would last for weeks.

daily chart

In the daily chart I bring you two viable possibilities (if you are experienced in elliot waves we can raise a more in-depth discussion in the comments about both)

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The first and the one I believe to be least viable is that wave 3 ended in 1.618 of the fibonacci projection and wave 5 ended in 2.618. Thereafter, we would initiate a correction that would lead us to something close to US $ 7,200 and may drop to US $ 6,400 in a way that does not invalidate that impulse as being a higher grade 1 wave. I think this possibility is less viable as it would leave us again below the 200-period moving average at a time when the golden cross (crossing the 50-period moving average positively crosses the 200-period moving average)

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Taking the last golden cross as an example (but this can be seen in all previous golden crosses), the price does tend to fall back after the event, but never before did it cross and close below that, so I have the next possibility as the most viable.

 

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All of this is actually an extended wave 3 that took something close to 2.618 of the extension of wave 1. Since wave 3 has been completed we can now project wave 4 ending at the bottom of the channel, where there are countless confluences with the historic high channel , the bottom of the fork traced from all that fall, the moving averages of 200 and 50 periods, the bullish channel formed through the beginning of this impulsive wave among other things that if I brought it would leave this study quite massive.

 

Halving

Initially I will explain what halving is and what it is for:

When Satoshi Nakamoto created Bitcoin he imposed a “maximum limit” of 21 million units of bitcoins to be mined where for every 210,000 blocks, the amount of bitcoins created would be cut in half, that is, miners would have less and less rewards in bitcoin, which by the law of demand and supply would make the bitcoin price have a pump.

Historically as I brought in a past analysis, we see that this really happens, the price of bitcoin goes up exponentially whenever halving happens:

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Some conclusions I have already brought about this chart:

  • The price always makes a pump taking the price to a new level
  • Bitcoin can only surpass its historical maximum after halving

These two obvious conclusions are undoubtedly events with extremely high probabilities of happening, but remember that we are participating in events never before seen in bitcoin, from that I will use the system of time pivots, which show me the possible moments where there will be greater market volatility, with a selling force forming a top or a buying force forming a fund, as I explained in a previous study.

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Returning to the previous projection and applying the most important time pivots, for this counting to make sense and we enter the halving with a pump, what would have to happen is that wave 4 correction ends between February 25th and March 5th for that the major correction behaves as described below:

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This red ABC correction would take us to May, which, as we know, is Halving's date. This projection would put us in halving with the perfect potential for there to be a parabolic rise as it happens historically in waves 3 of the upper degree. Now just SUPPORTING that wave 3 of the upper grade behaves in the same way as this wave 3 of the lower grade and reaches 2.618 in length we would be seeing the price coming close to the historic top that is around US $ 20,000.

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In the other possibility, that we would have already finished the 5 waves we would be seeing a correction that in the worst case can reach up to U $ 6,400 without disconfirming the count, these corrections of wave 2 tend to take longer and by the pivots of time it could end by around April, leaving us with an impulsive wave before halving.

In this possibility we would see bitcoin after halving making a very sharp and long correction so that it would rise again months after halving, then we can take the Litecoin (LTC) chart, even if it occurred in different proportions, as an example: Pricing it occurred months before halving and after halving there was a fall that ended only recently.

 

Thank you for reading :D

Disclaimer: this article was produced for the purpose of study, it is not recommended to use the prices mentioned as a parameter for buying and selling


zulonga
zulonga

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Zulonga
Zulonga

Relevant information and analysis.

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