Bitcoin (BTC) had a good run between 2016 and 2018. It erased most of its gains in 2018 and now it has recovered some of those gains in 2019. Is this something we are seeing for the first time? No, it’s not. We saw the price did the exact same thing during 2014 after its first downtrend when the price found a temporary bottom at the 21 Month EMA. This parabolic run was then followed by a brutal downtrend that lasted through the remainder of 2014 and most of 2015. The Schiff Pitchfork on the monthly chart for BTC/USD shows how the price topped out where it was expected to top out. However, a lot of people are now anticipating a sharp decline to $2,500 any time soon before the next bull run begins.
It is true that the bear market has been very exhausting and the majority of investors are just waiting for the price to start a bullish cycle now. However, this is rarely how it happens and we will explain why. First of all, the recent parabolic move from December, 2018 to June, 2019 shows that there is still a lot of optimism in the market. Is that a bad thing? Yes and no. It is a good thing that cryptocurrency adoption is on the rise and more people are hearing about Bitcoin (BTC) but this kind of optimism also attracts predators. As long as there are people who will buy the lambo dream, the whales and market makers will keep preying on them, exploiting their naiveté and leaving them holding the bags while they systemically dump on them. All the market makers have to do is test the waters and see if retail traders are ready to take the bait.
When market makers are done catching the small fish as they did in 2018, they need a different game plan to go after the big fish. This would be the fishing equivalent of “chumming” which is considered illegal in most parts but when you are in the middle of nowhere there is no one stopping you. The risk is higher for market makers with this approach but so are the rewards. In this phase of the game, you cannot expect fair play because the stakes are too high for both sides. The way the price cut through the all-important $6,000 resistance zone to hunt the bears is a prime example of that.
Most of those bears or sharks in this case, that got lured in and then caught up as a result of chumming are now fish food which will attract most small fish once again. The market makers are getting ready for that and soon as the last wave of those sharks are done with; they will catch the small fish in a wide net. By then it will be too late to get out. The last remaining bears are likely to be shaken out as we see BTC/USD rally towards $10,800 in the near future. After that, we could see the all-important decline below the 38.2% fib extension level begin. This will be the beginning of the downtrend that might eventually see the price decline to a price of $1,200 if not lower (2013 top) towards the end of the ongoing bearish cycle.