Today we discuss Bitcoin in April.
Charts by TradingShot
Bitcoin is currently on its 3rd straight bullish 1 week candle. We are rising for 3 weeks in a row. This move is happening straight after the $3900 flash crash and is taking a lot of traders by surprise. But should it? Will get back to this in a second but first lets dive into Bitcoin Fractals and why they are more important now in an uncertain market.
Fractals are not only abundant in nature, they are also the building blocks of trends. They are simple yet important, repetitive formations, self-similar across different time frames and used by traders to identify or conform a trend (markets trend about 30% of the time) in order to trade it profitably. When broken apart, they exhibit the same characteristics as greater patterns or price movements. Fractals lag the market, because it takes time for them to form. They can include any number of bars, though the minimum is 5.
Fractals in Bitcoin form the swing points of the market (creating fractal levels) and bearish fractals and bullish fractals are distinct. There are several trading strategies based on them, each with their own set of rules for entry and exit.
Based on Bitcoin Fractals from entirely two different time periods we can see a potential bottoming process starting. Especially if we are repeating the main fractal of the 2018 bear market. This suggests that Bitcoin is entering the "Bottoming Process" of its new Higher High and a new uptrend should follow in the next few weeks.
We are only looking at the Fractals and comparing them under largely different parameters. The first was a whole Bear Market span. The second is currently only the start of the new Bull Market.
The RSI (relative strength index) is rising as it did on the December 10, 2018 candle, while the LMACD (Logarithmic Moving Average Convergence Divergence) is coming off a bearish cross entering a sequence similar to November 2018 - January 2019 that ended with the bullish cross which started the Q2 2019 uptrend.
Whats ahead…keep an eye on stimulus payments to be handed out via Square's Cash App. Both Square and Venmo are in talks with the US treasury. The government intends to hand out the money by April 6.
Interesting information to remember…many top Bitcoin exchanges have seen an influx of new users since the coronavirus lock-down started. These exchanges saw a notable increase in both signups, and trading volume—with some citing a doubling, or in some cases, a tripling of their usual rate of new signups. These exchanges are: Kraken, OKex, Bitfinex, Paxful, and Luno…and it was also reported Coinbase also saw an increase.
Research and analysis of the Bitcoin market tells me…the Bitcoin price in April will be very tricky but it’s safe to say will be in the $3800 - $7400 range. We will see intense selling pressure once we are above $6400 all through the month.
Keep in mind…in roughly 42 days, Bitcoin halvening will occur. This will reduce the block reward from 12.5 BTC per block mined to just 6.25 BTC. So, each miner will see their revenue cut in half, at least initially.
Facts to consider…Miner-led selling pressure for Bitcoin is likely to continue to increase because both Bitcoin Cash and Bitcoin SV will be experiencing their halving on April 8 and April 9. Keep in mind all three assets share the same SHA-256 mining algorithm and miners can seamlessly redirect their hash power to the asset that provides the highest return on investment. When Bitcoin Cash and Bitcoin SV halve their block rewards, this should force miners to direct even more hash power to Bitcoin as it will still have a 12.5 native unit block reward (instead of 6.25) for about a month longer. Therefore, we should expect difficulty adjustment increases for Bitcoin that should further squeeze profit margins for all miners.
During the month of April…Bitcoin must hold the key $4800 level. Any lower and are chance further increase for another drop to the $3100…possibly touching $2800.
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