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Now that the bitcoin price has broken above the $5,000 mark to set a new 2019 high, crypto traders are anxiously watching the charts to discern whether the flagship cryptocurrency will slaughter its next major resistance wall at $6,000 to triumphantly initiate a new bull market.
Below, we dive into the bull and bear cases for bitcoin as traders grapple to maximize their profits when the cryptocurrency embarks on its next major move.
Bear Case: Bitcoin Hasn’t Been This Overbought Since December 2017
After falling as low as $4,778 on Thursday, the bitcoin price is currently holding slightly below $5,000 on Bitstamp.
Citing a technical tool called the GTI Global Strength Indicator, Bloomberg technical analyst Mike McGlone warns that bitcoin is currently at its most overbought since December 2017 when it was neck-deep in a rally that carried it as high as $19,891 before its historic crash.
According to one metric, bitcoin hasn’t been this expensive since December 2017. | Source: Bloomberg
“The market got so compressed, volatility was so low, it just went poof! It broke out. It was released from the cage,” McGlone commented in a Bloomberg analysis piece. “Now it’s a question of duration and I suspect when you have such a massive bubble, you’ll always have an overhang of people who need to sell.”
Adding to the bear case, David Tawil told Bloomberg that bitcoin’s 20 percent surge past $5,000 was “not a particularly comforting move” and that he expects to see a near-term sell-off.
“We continue to expect another leg downward,” said Tawil, president of crypto hedge fund ProChain Capital. “It’s nice to see a positive move as opposed to a negative move, certainly. But at the same time, for investor purposes, it’s not a particularly comforting move. Certainly, an investor would much rather see a gradual rise with constant floors in terms of downside being established, as opposed to a very, very quick run-up. It could be easy come, easy go.”
Bull Case: Crypto Market on Verge of ‘Parabolic’ Move
However, the crypto market’s recent upward push has emboldened the bulls as well, and hopeful analysts pound the table on a variety of alternative technical metrics.
Writing on Twitter, veteran trader Peter Brandt said that the bitcoin price could be on the verge of a “parabolic” phase like the one it experienced during the historic 2017 crypto boom.
This veteran crypto trader says that the bitcoin price is primed for another “parabolic” rally. | Source: Peter Brandt/Twitter
Brant said:
“Either from Dec ’18 low or from retest of same (circa analog dbl bottom in 2015) it would not surprise me if $BTC enters a new parabolic phase.”
Still, he cautioned that there was a chance that the market retests its December 2018 low ($3,122 on Bistamp) before forming a so-called double bottom and shooting higher.
While Bloomberg’s Mike McGlone protests that bitcoin is at its most expensive since 2017, Fundstrat strategist Tom Lee further pumps the bull case with his argument that BTC is actually undervalued by 64 percent.
Speaking on CNBC, Lee said that Fundstrat analysis pegs the cryptocurrency’s fair value at $14,000, suggesting that it has plenty of upside before hitting a true fundamental barrier.
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