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Bitcoin (BTC) Likely To Find Its True Bottom In Q2 Of 2019

Bitcoin (BTC) Likely To Find Its True Bottom In Q2 Of 2019
Breaking News / Bitcoin / Analytics

Bitcoin (BTC) is preparing to rally towards the 61.8% Fib level which would correspond to a price of $4,500 or higher. While we expect this rally to be short lived and not last for long, there is still a high probability that this rally will take place. The daily RSI and Stochastic RSI on the BTC/USD chart point to short term oversold conditions which means a correction the upside can be expected before the final corrective wave to the downside. In our previous analyses, we have mentioned that an imminent decline below $3,000 is almost a certainty and it is only a matter of time before it happens. However, the manner in which BTC/USD declined last week before the weekly close has delayed this decline and created room for limited upside short term.

The vast majority of traders are still convinced that we have already bottomed and the price will have to rise from here to gradually reach a new all-time high. Now that might seem very convincing after a few quick rallies to the upside but the long term outlook and the big picture is hardly affected by short term movements. The most such short term moves can do is delayed the inevitable but it cannot stop it. As for sentiment, we have seen people change their minds about the $6,000 support and it would therefore not be surprising to see them change their mind about $3,000 when the price is there. A lot of people assumed that the miners would not let the price decline below $6,000 but it did.

The reasons most people did not expect a decline below $6,000 were quite plausible actually. The mining cost on average was $6,000 around then and if the miners do not make a profit, people assumed they would stop mining. This was not the only reason people had to think the price was not going below $6,000. Many believed that this level has held for so long so many times that there is no reason that it might break this time. Then the inevitable happened and it caught most people off-guard. Now, the reasons why BTC/USD declined below $6,000 were also quite plausible but now that people do not have an interest in them as the price has already declined, nobody talks about them. However, if we do not learn from the past we will keep on repeating the same mistakes over and over again. The reason Bitcoin (BTC) did decline below $6,000 was because for some big miners the cost to mine one Bitcoin (BTC) was around $3,200.

A lot of people did not know this and assumed that every miner would have bought their own rigs and infrastructure ignoring the scenario that some miners might just be renters for whom the cost to mine came down to $3,200 back then. This is why the price declined in my opinion. As we can see, the daily chart for BTCUSDShorts is showing a trend reversal which means the bears are to fight for control once again. I believe the price will fall below $3,000 for similar reasons it fell below $6,000. Most miners know that the fall will be quick and short lived and the Bitcoin (BTC) they mine will be worth a lot more long term so they will not stop. Moreover, we could expect manipulation similar to the one seen last week which will trigger some stop hunting and result in a deep plunge below $3,000.

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