Bitcoin (BTC) has made quite a big move to the upside. It is still holding strong above $8.6k but that is not likely to last for long. The daily chart for BTC/USD shows us that we have soon to see a decision. The Chinese new years is days away on the 27th of January and we have seen most of the time in Bitcoin’s trading history that a key decision is made around the Chinese New Year. The price has yet to test the 200-day moving average which could be a point where it faces a strong rejection. Meanwhile, the RSI and Stochastic indicators signal overbought conditions but the price still has room to rally towards $9,000.
The primary reason everyone is all so excited about a bull trend in BTC/USD is the upcoming Bitcoin halving. Most retail traders on Twitter and elsewhere are already talking about how Bitcoin keeps on making a new yearly high and that it will continue to pump higher and higher this year. I have no doubt that the market makers and the whales will do their best to trap retail traders but this will be one of the biggest bull traps we have seen in the history of Bitcoin. The next crash in BTC/USD will be very different from anything we have seen before and has the potential to push Bitcoin into an extended bear trend that could last till 2021. The price may still see some positive movements around halving but it is extremely unlikely to reach new all-time high either this year or the next.
The cracks have been finally exposed as we have now seen BTCUSDLongs/BTCUSDShorts break the parabolic uptrend. This is likely to lead to a new bear trend that could result in major long liquidations. Before that happens, it is likely that the big players would want to give the retail traders more reason to still be long on the market. At this point many retail traders are expecting a move towards $9k and it might happen for the sake of trapping in such traders before the next major downtrend.
There were two parabolic rallies during this cycle same as before. However, the difference this time is that the second parabolic rally did not end up shooting past the previous one to make a new all-time high. This is a clear sign of a slowdown and indicates where the market might be headed in the weeks and months to come. Major factors including the impact of a potential decline in commodities like oil and gold as well as forex pairs like the EUR/USD or indices like the S&P 500 (SPX) are more reasons not to be bullish on Bitcoin at this point as the risks heavily outweigh the rewards.