Bitcoin may be trying to bounce before a potentially major catalyst in 2020.
The world’s top cryptocurrency formed a bullish “outside day” on December 18. That’s when price makes a lower low and a higher high. Technical analysts view it as a reversal pattern that may indicate a change of direction.
It could also be noteworthy because the pattern occurred around the $7,000 area that some traders have eyed as support.
Next, the weekly chart of BTCUSD showed a double-bottom with a bounce near the same level that held in late November. It actually made a slightly lower low, which could be viewed as a false breakdown.
Taken together, those chart patterns potentially suggest that selling pressure is nearing an end. It follows three months of declines that began when the token broke sharply under $10,000 in late September.
Bitcoin Halving In the Spring
Another big event is coming in the spring as the supply of new cryptocurrency gets cut in half.
Remember that scarcity is one of the key attributes of money. (Another is interchangeability.) The mythical creator of BTC, Satoshi Nakamoto, designed its ledger system to ensure scarcity by slowing the creation of new coins. This is achieved with periodic “halvings.”
That means miners will get just 6.25 BTC each time they solve a block, down from 12.5 BTC now. The reduction is expected to occur this coming May. Prices rose sharply before and after the previous halvings in November 2012 and July 2016.
Back then, cryptocurrencies were still niche products not easily accessible to many retail investors. But that’s changed in recent years.
In conclusion, BTC has had a volatile year but has still roughly doubled. It now has a wider investor potential base than ever, some interesting chart patterns and a catalyst with a strong historical track record. If you haven’t looked at Bitcoin lately, now could be the time.
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