Bitcoin (BTC)’s price movement so far has been a reaction to the EUR/USD pair for the most part. In fact, Bitcoin (BTC) has rarely made any moves that were not coherent with movements in the EUR/USD pair. The monthly chart above for EUR/USD shows the Euro (EUR) in a strong ascending channel against the US Dollar (USD) since 1994. The first large circle shown on the chart above between 2003 and 2008 bears extremely close resemblance to the one formed this time between 2017 and 2018. As we can see, the price has broken this circle in the past to climb to the top of the ascending channel where it topped out. Bitcoin (BTC) did not exist back then; otherwise we would have seen an unprecedented rise in its price just when the EUR/USD pair broke out of the big circle as a weak dollar has been seen to be favorable to emerging markets in general and Bitcoin (BTC) in particular.
Fortunately for Bitcoin (BTC), the exact same development is in play this time and Bitcoin (BTC) might be on the verge of an unprecedented rise. Some analysts and industry leaders have mentioned during this correction that the gold rush is over and Bitcoin (BTC) may not see the same gains as before. However, if the above setup goes as it currently is, this could substantiate seemingly unreasonable predictions like that of John McAfee or Tim Draper. Before we discuss those predictions, let us first examine closely how exactly the two scenarios are similar. The EUR/USD pair had a correction and as we can see on the chart above, the price touched the bottom of the short term descending channel back in 2001. However, it did not begin the climb before it had touched the bottom of the ascending channel. So, in 2002, it touched the bottom of that ascending channel and began a climb from there all the way till it entered the circle. It consolidated inside the circle and then began a new climb towards the top of the ascending channel.
Let us examine what happened recently when the EUR/USD pair had a correction. In the aftermath of 2009, the EUR/USD pair entered a correction as demand for the US Dollar rose sharply. This lead to a steady decline of EUR/USD and finally resulted in the pair touching the bottom of the descending channel around 2014. In a moment we will see how this corresponds to Bitcoin (BTC)’s correction in 2014, but first let’s analyze the similarities in EUR/USD further. In early 2017, the EUR/USD pair touched the bottom of the ascending channel the same way it did back in 2002 before beginning a new trend. As we can see, the price the EUR/USD pair then began a new trend until it entered the same circle as it did before, but this time the circle is smaller in size. However, the similarities are surprisingly the same. If this trend follows through, we will see a rise in Bitcoin (BTC) that has never been seen ever since its inception.
Let us now examine how Bitcoin (BTC) performed during each cycle of the EUR/USD pair. The monthly chart above for BTC/USD shows that the price of Bitcoin (BTC) started to nosedive in 2014. If we check the EUR/USD chart, we can see that this period corresponds to a steady decline in the EUR/USD pair after it had touched the top of the descending channel. Similarly, the period between 2017 and 2018 has seen Bitcoin (BTC) performing well against the US Dollar (USD). If we analyze the performance of the EUR/USD pair during that time, we will see that it had just touched the bottom of the ascending channel and started a new trend.
With such close similarities between the price action of Bitcoin (BTC) and the EUR/USD pair, we can not only see which way Bitcoin (BTC) is going to move based on movement of the EUR/USD pair, but we can also predetermine the intensity of that movement. The last time the EUR/USD pair entered a circle, it was close to breaking a downtrend resistance. We can see on the chart above that this time, it is exactly the same. If EUR/USD breaks out of the circle and then goes on to break the downtrend, it will have to rise to the top of the EUR/USD ascending channel, during which time Bitcoin (BTC) can be expected to rise to astronomical highs, the likes of which we have not seen before.