Here’s why Bitcoin (BTC) Price Prediction Models May Now Fail
Major crypto blogger believes there is a reason models for predicting the BTC price that have recently been relevant may now fail, here’s the explanation
The attention of the crypto community is now focused on Bitcoin in the context of the approaching halving which is expected to occur on May 13 this year. This event will bring down the current miner reward from 12.5 BTC to 6.25 BTC per new block.
The latter think that a lot of miners are going to capitulate and switch off their gear since their business may become less profitable. They also insist that miners will have to start selling their BTC simply to pay the bills.
Taking into account these bullish expectations and other prediction patterns, crypto blogger @C3_Nik states that right now, amid the crisis caused by COVID-19 and heavy stimulus programs implemented by the Fed, previous models for predicting the BTC price may no longer be relevant.
In a recent series of tweets, @C3_Nik elaborates that in the current situation on the markets, as the global economy is facing multiple crises, previously used models for predicting Bitcoin price may stop working.
The blogger explains this by the fact that previous models were based on “a period in which other markets were in a bull run, during a period in which investors were risk-on.”
@C3_Nik talks about institutional and retail investors who have been purchasing Bitcoin recently. He shares his doubts regarding the fact that retail holders are likely to buy BTC amid the current crisis.
However, the blogger admits that the situation could change at any moment.
Author: Tue, 04/21/2020 – 10:50
Mining Difficulty Might Reach All-Time High Before Bitcoin Halving
Bitcoin (BTC) mining difficulty just saw its biggest rise in six months and it’s estimated it’ll reach an all-time high in two weeks.
Bitcoin mining difficulty, a measure showing how hard it is to compete for mining rewards, just went through another adjustment, and the numbers were close to what was estimated yesterday, but still haven’t reached that far. It went up 8.45%, thus reaching 15.96 T, short of 16.55 T discussed a day ago, but more than was estimated two weeks ago (5.65%).
Also, though it dropped significantly in March, it now seems that it may be back on the road of its all-time highs. As of now, BTC mining difficulty is expected to go up another 8.32%, in which case it would reach a new all-time high of 17.29 T, according to major Bitcoin mining pool BTC.com estimations. However, this forecast will change depending on changes in hashrate, the computational power of the Bitcoin network. Should it increase further, the mining difficulty will follow. The average hashrate stands at 114.10 EH/s – highest since mid-March.
The recent difficulty adjustment makes this the measure’s biggest movement upwards since September 13 last year. For the last half a year, the jumps moved between 0.52% and 7.31%. In that same time frame, there were only four drops, but with a major one, second-largest ever, occurring on March 26.
That said, Bitcoin halving is expected to happen in some three weeks, putting one more difficulty adjustment between this one and the mining reward halving event.
Learn more: Hopes and Strategies In Play As Miners Prepare For Bitcoin Halving
Author: By Sead Fadilpašić
If Precedent Holds, Bitcoin Won’t Fall Much Lower Than the $3,700 Bottom
Bitcoin has mounted a steep recovery over the past five weeks. Since the $3,700 bottom that was seen on March 12th, the cryptocurrency market has mounted a steep comeback, with BTC reaching as high as $7,470.
The past few days, however, have seen the reversal taper off in tandem with the stock market; once again, there are analysts fearful of a return to the lows, or maybe even something worse.
Despite this, a growing confluence of signs is showing that Bitcoin is nearing a point at which it may bottom. Yesterday, an unexpected sign was added to that list.
Due to how it is structure, the Grayscale Bitcoin Trust, the flagship product of crypto-fund provider Grayscale, often trades at a premium to the spot price. That’s to say, buying the equivalent of one BTC through Grayscale would cost more than it would be on Coinbase, for instance.
What’s important about the premium is that it oscillates, determined by the whims of the free market. As a result, it acts somewhat of an indicator of investor mentality.
Crypto analyst “Bitcoin Jack” suggested that accumulating Bitcoin the last five times the Grayscale premium was this low has historically “been profitable,” with each drop in premium lining up with bottoms in the BTC price.
This precedent suggests that should history rhyme, Bitcoin is unlikely to fall much lower than $3,700.
This latest sign of a bottom came shortly after trader Nunya Bizniz suggested that the rapid spike in volumes Bitcoin saw after the March 2020 crash is indicative of a bottom, noting that previous exponential increases in volume coincide with “turning points in price.”
Not to mention, Glassnode observed that one of its proprietary indicators, which tracks the profitability of BTC holders, is on the verge of entering a territory that has historically coincided with the end of bear trends and the start of full-blown bull markets.
NUPL is approaching the “optimism” zone as $BTC passes the $7k mark.
We saw a similar pattern in April 2019 – a breakout into this zone usually signifies increased investor confidence and can lead to further price gains.https://t.co/5vT1ZohJua pic.twitter.com/jTJxYjEaJB
— glassnode (@glassnode) April 20, 2020
Despite the abovementioned trends showing that Bitcoin is likely to fall more from a macro perspective, it’s entirely feasible that the cryptocurrency starts to fall off in the near term, but maintains its $3,700 bottom.
Avi Felman — a trader and analyst at crypto-asset fund BlockTower — observed two signs that a bearish reversal is possible:
- The Tom Demark Sequential just printed a “9” candle on the three-day chart for BTC. Previous “9” candles on this chart marked the mid-March bottom and the December 2019 bottom, but front-ran the $10,500 top seen earlier this year.
- Bitcoin has failed to break its three-day 50 and 200 simple moving average.
Also, as reported by Bitcoinist previously, an analyst observed that Bitcoin is currently failing to surmount the average miner cash flow indicator, which predicted the 2018 and 2019 bottoms down to a few percentage points.
It’s a striking observation suggesting bears have the potential to take prices lower in the days and weeks ahead.
Photo by Harley-Davidson on Unsplash
Bitcoin Shows Signs of Reversal; But $6,550 Shows Bullish Case Remains Intact
Bitcoin failed to surpass the $7,200 resistance and declined below $7,000 against the US Dollar. BTC price is showing a few bearish signs, but the bulls are likely to protect $6,555.
- Bitcoin is declining and trading below the $7,000 support zone against the US Dollar.
- It is testing a major support near the $6,750-$6,800 region.
- There was a break below a key bullish trend line with support near $7,110 on the hourly chart of the BTC/USD pair (data feed from Kraken).
- The pair is likely to find a strong buying interest if it corrects further towards the $6,555 support.
After a couple of failed attempts above $7,200, bitcoin price reacted to the downside against the US Dollar. BTC started a downside correction from the $7,229 swing high and traded below the $7,100 support.
The price declined sharply below the $7,000 support and the 100 hourly simple moving average. More importantly, there was a break below a key bullish trend line with support near $7,110 on the hourly chart of the BTC/USD pair.
The pair even spiked below the $6,800 support and tested $6,750. A low is formed near $6,761 and the price is correcting consolidating losses.
Bitcoin price is testing the 23.6% Fib retracement level of the recent drop from the $7,226 high to $6,761 low. An initial resistance on the upside is near the $7,000 handle (the recent breakdown zone).
The 50% Fib retracement level of the recent drop from the $7,226 high to $6,761 low is also near the $7,000 zone to act as a major hurdle for the bulls.
The main resistance is now forming near the $7,100 level and the 100 hourly simple moving average. Any further gains could open the doors for a strong increase above the $7,200 resistance area.
On the downside, an immediate support is near the $6,750-$6,800 zone. If bitcoin slides below the $6,750 support, there is a risk of an extended decline in the near term.
The key support is seen near the $6,555 level, where the bulls are likely to take a stand. Any further losses may perhaps start a substantial decline towards the $6,200 and $6,000 levels in the near term.
Hourly MACD – The MACD is gaining momentum in the bearish zone.
Hourly RSI (Relative Strength Index) – The RSI for BTC/USD is now below the 40 level.
Major Support Levels – $6,750 followed by $6,555.
Major Resistance Levels – $7,000, $7,100 and $7,200.
Image from unsplash
Author: Aayush Jindal